An increase in underlying profits despite global challenges demonstrates Lloyd's is getting better at navigating uncertain waters, Sky's Ian King writes - and its chief executive thinks higher interest rates create opportunities.
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It is a performance best described as resilient given some of the major claims events with which it had to grapple: losses from Hurricane Ian came in at £2bn while losses related to Ukraine came in at £1.4bn. Under so-called"mark to market" accounting rules on its investments, Lloyd's is obliged to mark the value of its assets down to reflect prevailing market conditions - in other words, higher interest rates.Silicon Valley Bank
Mr Neal said:"The reality is that rising interest rates, dare I say it, are good for us as insurers - it creates an opportunity for us to enhance our profitability - but on a mark-to-market basis you crystallise the reduced value of the asset, notwithstanding the reality that it will yield more over time.
What makes things tricky is when you do not charge enough for your premiums or when losses come in higher than expected. So it is all down to being disciplined with underwriting and making appropriate risk assessments. It has, for example, enabled the market to meet claims more rapidly: Mr Neal said today that customers could now be paid in hours and days rather than the weeks and months it took before - including in the wake of Hurricane Ian.Handling the conflict in Ukraine also remains critical. The market has been closely involved in helping set up the sanctions regime against Russia and establishing a shipping corridor in the Black Sea to retrieve grain and fertiliser stranded in Ukraine's ports.
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