LONDON (Reuters) - Hurricanes, typhoons and wildfires drove Lloyd’s of London to steep losses for the second year running, though its chief executive said he expects a sharper focus on performance will bring the market back into profit this year.
Lloyd’s, which started life in Edward Lloyd’s coffee house in 1688, insures complex risks from ships to artwork. It houses around 80 member syndicates and its results are an aggregate of its members’ financial performance.
Insured losses from natural catastrophes such as typhoons in Japan and hurricanes and wildfires in the United States totalled $80 billion last year according to industry estimates, following losses of $140 billion in 2017 after three large hurricanes in the U.S. and the Caribbean.
Competition in the sector has made it harder for insurers to raise their rates significantly even after the 2017 losses. Lloyd’s last year told its members to drop their worst-performing lines of business.
“We are super-confident that the plans presented for 2019 will put us back in profit,” chief executive John Neal told Reuters by phone, adding that the key issue was to ensure the plans were executed.
Lloyd’s recorded a loss of 1 billion pounds in 2018, after a 2 billion pound loss in 2017.
Lloyd’s’ combined ratio, a measure of underwriting profitability, strengthened to 104.5 percent from 114 percent. A level above 100 percent indicates a loss.
Following a six-month review of its business, Lloyd’s said it will publish a prospectus with details of its plans on May 1. In an outline of the prospectus published on Wednesday, Lloyd’s said it aimed to cut the costs of doing business at Lloyd’s and encourage new types of capital onto the Lloyd’s platform.
Lloyd’s has also come under fire over its policies on sexual harassment, following a Bloomberg News report last week highlighting issues with sexual harassment in the market.
Lloyd’s announced an action plan on Tuesday in response to the report.
It will add two women to its nominations committee and made a commitment to hear the accounts of the women in the Bloomberg article in a safe and confidential space. It has also introduced a number of policies, including sanctions and potential life bans on entering its City tower.
Former chief executive Inga Beale, Lloyd’s first woman CEO, championed diversity. Neal took over as CEO in Oct 2018.
Neal told Reuters he had written to the chief executives of the market’s members to ask for their policies on a number of diversity and inclusion issues, including sexual harassment, drugs and alcohol, in an attempt to raise standards.
Reporting by Carolyn Cohn; editing by Louise Heavens and Elaine Hardcastle