Lloyd's non-life syndicates produced their best underwriting performance in years, generating £2.8 billion of aggregate underwriting profit in 2023, according to the latest market analysis from Insurance DataLab.
This is 81% higher than the £1.6 billion for 2022, making it the third successive year of underwriting profitability.
The performance was driven by a 25% gross claims reduction, falling to £14.4 billion from £19.2 billion in 2022. This increase was noted despite syndicates facing a 13% rise in operating expenses, reaching £10.0 billion from £8.8 billion in the previous year.
Gross written premium (GWP) was up 6.8% to £34.1 billion, indicating a moderate growth in contrast to expansion overseen through the years with premium growth rates reporting an increase of 28.1% in 2022 and 12.4% in 2021.
Property insurance emerged with a stellar performance, reporting the largest premium volume and the highest profitability. The sector achieved a substantial 21% GWP increase to £13.1 billion with an underwriting profit of £1.6 billion. Having surpassed third-party liability insurance with premium income decreasing from £12.3 billion to £11.5 billion, property insurance now stands as the market leader.
Property syndicates benefited from a 33% reduction in gross claims, offsetting an 18% increase in operating expenses. This reflects the sector's ability to navigate challenging market conditions while maintaining profitability.
The Lloyd's market remained very resilient, with all lines of business now generating underwriting profits for the second consecutive year. This is attributed to reduced claims costs in almost all sectors except motor insurance which recorded a 38% increase in gross claims to £475.9 million.
"The non-life Lloyd's market has achieved an impressive improvement in underwriting results. However, the rising expense trend demands attention, with current levels significantly exceeding those reported between 2018 and 2021, following a 20% cost surge in 2022," Dan King, Insurance DataLab co-founder, concluded.
How do you interpret these significant shifts in the Lloyd's market? What factors do you think have contributed to the property insurance sector's outstanding performance? Share your thoughts in the comments section below.
