Filed Under:Agent Broker, E&S/Specialty Business

Lloyd’s of London takes ‘massive hit’ from low investment return

Britain's Queen Elizabeth II during a visit to Lloyd's of London, Thursday, March 27, 2014. (AP Photo/Kirsty Wigglesworth, pool)
Britain's Queen Elizabeth II during a visit to Lloyd's of London, Thursday, March 27, 2014. (AP Photo/Kirsty Wigglesworth, pool)

(Bloomberg) -- Lloyd’s of London reported a 30% drop of full-year profit as the world’s largest insurance market was hurt by continued pressure on pricing and the lowest investment returns since at least 2001.

Earnings declined to 2.1 billion pounds ($3 billion) for 2015 as income from investments, primarily fixed income, sank 60% to 400 million pounds, according to the company’s annual report Wednesday. Weaker pricing in 2015 is expected to continue this year, it said.

“We’ve taken a double hit from reduced margins in underwriting and lower investment yield,” Chief Executive Officer Inga Beale said in an interview with Bloomberg Television Wednesday. “On the investment side we saw a dramatic reduction in 2015 that was a massive hit” to earnings.

Related: Q&A: Lloyd's CEO Inga Beale

Beale said the low interest-rate environment and a “healthy” return on capital of 9.1% continued to attract new money into the industry, placing further pressure on insurance rates that have already seen double-digit declines.

It’s so-called combined ratio rose to 90% from 88.4% amid higher claims in the energy sector and the explosion at Tianjin Port in China. An increase in the ratio indicates a deterioration in profitability.

You’re invited to join us on Facebook!

Copyright 2017 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Featured Video

Most Recent Videos

Video Library ››

Top Story

20 best car insurance companies of 2016 ranked by consumers

What are the best auto insurance companies? Insure.com’s customers rank 20 of the biggest insurers.

Top Story

7 things insurance agents need to know about P2P insurance

Insurance agents and brokers face competition from a variety of sources, including P2P start-ups. Here are seven things you need to know about them.

More Resources

Comments

eNewsletter Sign Up

Specialty Markets Insight eNewsletter

Receive updates and analyses on hard to place and challenging coverages. Sign Up Now!

Mobile Phone

Advertisement. Closing in 15 seconds.