Lloyd’s expects to pay out up to £5bn in Covid-19-related customer claims on a gross basis, the insurance market confirmed alongside the publication of its half-year results.
In the first six months of 2020, Lloyd’s Covid-19 claims after reinsurance recoveries totalled £2.4bn, contributing 18.7% to the market’s combined ratio of 110.4% and driving an overall market loss of £0.4bn.
Excluding Covid-19 claims, the market’s combined ratio has shown “substantial improvement” at 91.7%, down from 98.8% in the first half of 2019.
It comes as Lloyd’s announced a pre-tax loss of £0.4bn for the first six months of the year, largely driven by the Covid-19-related losses.
Excluding Covid-19 losses, the market delivered an underwriting profit of £1bn, demonstrating a “significant improvement” in Lloyd’s underlying performance.
This was supported by 7.1 percentage point improvement in the attritional loss ratio which has dropped to 52.6% in the first six months of 2020, with prior year development remaining stable at 0.5%.
In its latest results, Lloyd’s said its strong capital and solvency position “ensures it can withstand the ongoing impacts” of the pandemic.
The market’s net resources increased by 7.2% to £32.8bn as at 30 June 2020, “reinforcing the exceptional strength” of Lloyd’s balance sheet, for example.
John Neal, Lloyd’s CEO said: “The first half of 2020 has been an exceptionally challenging period for our people, our customers, and for economies around the world.
“The pandemic has inflicted catastrophic societal and economic damage calling for unparalleled measures to stifle the spread of the virus, and to get businesses and economies back on their feet.”
He added: “Our half year results demonstrate that our robust approach to performance management and remediation has begun to take effect, evidenced by a significant turnaround in the underlying performance metrics, which give the truest indication of our market’s profitability.”