Lloyd’s of London has reported a loss of £900m in 2020 as a result of claims due to the Covid-19 pandemic.
In 2019 it made a profit of £2.5bn.
The 335-year old insurance market said that it expects payouts for coronavirus-related claims in 2020 to reach £6.2bn. After taking into account reinsurance policies, the net cost of Covid-19 for the market was £3.4bn.
“The year was also marked by a high frequency of natural catastrophe claims and the UK’s formal exit from the EU, driving further losses and uncertainty,” noted John Neal, Lloyd’s CEO.
However, the pandemic was the most costly single factor.
Covid-19 claims added 13.3% to the market’s combined ratio, a measure of claims payouts and other expenses vs. premiums paid by customers, pushing it to 110.3%. A combined ratio of 100% is break even (before taking into account investment returns), and a ratio less than 100% represents an underwriting profit.
Claims in 2021 will be impacted by, amongst other things, the week-long blockage of the Suez Canal by the stranded container ship Ever Given.