Outgoing CEO Inga Beale exits Lloyd’s on a pre-tax profit of $776m for the first half of 2018 and a combined ratio of 95.5%

Lloyd’s has squeezed a profit out of the first half of 2018, posting pre-tax profit of £588m ($776m).

A combined ratio of 95.5% for the first six months of this year was attained by the subscription re/insurance market - a slight improvement on 96.9% 12 months earlier.

A profitable first half on Lime Street marks the last reporting period under outgoing Lloyd’s CEO Inga Beale, before former QBE boss John Neal takes up the role on October 15.

“These results and return to profit demonstrate the strength of the Lloyd’s market following one of the costliest years for natural catastrophes in the past decade,” Beale said.

Lloyd’s capital position is at its strongest ever with net resources totalling £29bn, up by £1bn from at the same point in 2017.

The first-half reporting period also featured an improvement in the underwriting result up to £0.5bn from £0.4bn last year.

“This partly reflects Lloyd’s ongoing work that commenced in 2017 to review the worst performing portfolios, and the subsequent action by the market to reduce loss making lines,” Lloyd’s said.

Lloyd’s also reported a modest increase in gross written premiums to £19.3bn for this year’s halfway point, up from £18.9bn at the end of June 2017, “driven by improvements in pricing and growth in some profitable lines”.

The return to profit will be welcome at Lloyd’s, which suffered a £2bn loss in 2017, its worst annual performance since 2001.

“Whilst these results are welcome, Lloyd’s continues to concentrate on improving the Lloyd’s market’s long-term performance by taking action to address underperforming areas of the market,” said Beale.

However, the first half profit for this year is just half of the £1.2bn posted in the first half of last year, before claims from 2017’s catastrophe events overwhelmed the market’s underwriting results.

Pre-tax profits were impacted by a reduced investment return down from £1bn to £0.2bn, which Lloyd’s said was consistent with low returns seen across most asset classes over the period.

Operating expenses were flat at £150m, despite the market’s ongoing cost management programme and following is implementation of a Corporation Operating Model in 2017.

Market modernisation and Brexit remains priorities, Lloyd’s noted in its interim report.

“The Corporation also remains focused on making the Lloyd’s platform more competitive,” Beale said.

“Alongside the success of the mandate for the placement of electronic risks, we have recently launched the Lloyd’s Lab, our new innovation accelerator, which will help Lloyd’s use technology to better serve our customers around the world,” she continued.

“We have also worked tirelessly to secure the Lloyd’s market’s access to the EU27 and our Lloyd’s Brussels subsidiary will start writing business in the European Economic Area from 1 January 2019,” Beale added.