Lloyd’s of London expects to pay out up to £5 billion in Covid-19 claims, as a strong capital and solvency position ensures the insurance and reinsurance market can withstand the ongoing impact of the virus.
According to its half-year results, £2 billion of the expected gross £5 billion in Covid-19 payouts are reinsured.
In the first six months of 2020, Covid-19 claims made to Lloyd’s after reinsurance totalled £2.4 billion, contributing 18.7% to the market’s combined ratio of 110.4% and driving an overall market loss of £400 million.
Lloyd’s has maintained a strong capital and solvency position. The market’s net resources increased by 7.2% to £32.8 billion at 30 June, with a central solvency ratio of 250%, which is expected to be at 200% for the second half of the year.
John Neal, chief executive officer of Lloyd’s, said: “The first half of 2020 has been an exceptionally challenging period for our people, our customers, and for economies around the world. The pandemic has inflicted catastrophic societal and economic damage calling for unparalleled measures to stifle the spread of the virus, and to get businesses and economies back on their feet.”
“Our half year results demonstrate that our robust approach to performance management and remediation has begun to take effect, evidenced by a significant turnaround in the underlying performance metrics, which give the truest indication of our market’s profitability.”