Views on the news - the results are in, what do the H1 financials say about the industry?
We are deep into H1 results season and, looking at many of the numbers being reported, it’s fair to say that whilst rates are hardening in many lines across the Lloyd’s market, this isn’t translating to bottom line results across the board. Of course, with so many specialty classes of global business, this will always be the case, but following Lloyd’s Decile 10 initiative, the market is looking for results. The problem is perhaps succinctly summed up by Beazley’s CEO Andrew Horton; “Margins in many lines of business now look healthier than they have in some years.”
“Some years”, a delicate understatement for the once ‘broken’ cycle of soft market conditions stretching back seven years and beyond. Carriers are hoping for continued and perhaps accelerated positive price movement – a 10% increase for full year results has been mooted.
Other headwinds underline the importance for the market correction; claims inflation, loss creep from 2018 CATS and other pressures on underwriting profits; many combined ratios still hover around 100%. Some have questioned whether Lloyd’s will be able to post a profit in H1; this is on the back of £1bn market loss in 2018 and £2bn loss in 2017. Profit descriptors such as ‘lacklustre’ and ‘edging up’ are not uncommon, it will be interesting to see what the second half of 2019 brings.