Lloyd’s of London takes £1.1bn hit from Ukraine war
Lloyd’s of London has warned of a “challenging year” of natural catastrophes, the invasion of Ukraine and inflation as the world’s oldest insurance market took a £1.1bn hit from unrecoverable planes and cargoes related to the war in Ukraine.
The group said it had set aside the sum for customers affected by the conflict, mostly for grounded aircraft, ships trapped in the Black Sea and disrupted exports of cereals and agricultural products from Ukraine and Russia.
Lloyd’s also insures ships transporting grain from Ukraine’s ports under a UN-brokered deal in July. It has worked with the UK government to implement sanctions imposed over the war, including cancelling Russian firms’ insurance cover.
The group made a pre-tax loss of £1.8bn in the first six months of the year, against a profit of £1.4bn a year earlier. It posted a £3.1bn investment loss compared with £628m profit a year earlier, mainly because of higher interest rates, while its underwriting profit improved to £1.2bn from £960m.
Lloyd’s noted that financial markets had a difficult first half of the year as equity markets fell sharply, and bond yields soared as a result of markets expecting higher inflation, which led to a bond sell-off. Most of the investment loss was driven by valuation losses on fixed-income securities but Lloyd’s said these losses would reverse as the bonds matured.
John Neal, the chief executive, said:“With political and economic uncertainty looming large over society, it’s more important than ever that insurers are ready to support.
“Rising interest rates, while prompting an unrealised investment loss on paper at the half year, will be good news for insurers in the long term as returns on assets strengthen in 2023 and beyond. Meanwhile, with the
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