Lloyd’s of London slumped to a £2bn loss last year, its first in six years, as the insurance market was hit by a series of major hurricanes and earthquakes.
Hurricanes Harvey, Irma and Maria, along with an earthquake in Mexico, wildfires in California, monsoon flooding in Bangladesh and a mudslide in Colombia, cost the Lloyd’s market £4.5bn in claims, more than double the previous year when it paid out £2.1bn.
The hurricanes, which tore through the southern US and Caribbean last summer, hit Lloyd’s particularly hard because the US and Canada account for 50% of its business.
Bruce Carnegie-Brown, the Lloyd’s chairman, said: “To date, the market has paid more than 50% by value of the claims notified in relation to Harvey, Irma and Maria, and is in the process of paying the rest.” The three hurricanes accounted for 60% of last year’s losses.
He expects 2018 to be another challenging year, and added: “The market’s 2017 results are proof, if any were needed, that business as usual is not sustainable. As a result the market is embracing new ways of working.”
Last year’s 330 natural disasters are estimated to have caused a global economic loss of $353bn (£251m). This makes 2017 the second-costliest year on record behind 2011, when tsunamis and tornadoes struck.
Inga Beale, the Lloyd’s chief executive, said: “The market experienced an exceptionally difficult year in 2017, driven by challenging market conditions and a significant impact from natural catastrophes. These factors mean that for the first time in six years Lloyd’s is reporting a loss.”
The world’s oldest insurance market made a pretax loss of £2bn last year, compared with a profit of £2.1bn the previous year.
Its annual report showed Beale was paid £1.3m last year, down from £1.5m in 2016. She, along with other executives, did not receive a bonus payout under the Lloyd’s performance plan last year because the LPP only pays out if the company makes an annual profit of more than £100m.
Lloyd’s was one of the first businesses to publish its gender pay gap. Women earn 32.1% less than men (for bonuses the gap is even bigger at 40.7%).