The quality of Lloyd's balance sheet remains exceptionally strong, with net resources growing to GBP 32.4 billion (December 2018: GBP 28.2 billion) and the central solvency coverage ratio increasing to 266% (December 2018: 249%). The financial strength of the Lloyd's market was underscored by the recent affirmations of Lloyd's ratings by Standard & Poor's (A+ Strong), AM Best (A Excellent) and Fitch (AA- Very Strong).
Gross written premiums for the period to June 2019 were GBP 19.7bn, representing a 1.8% increase over the same period in 2018. However, the elimination of foreign exchange rate movements and growth from new syndicates points to a like-for-like year-on-year reduction in premiums of 2.6%. This is the net impact of a 6.5% reduction in business volumes as underwriters adjusted their books to improve performance and average risk adjusted rate increases of 3.9%. The Lloyd's market also saw a reduction in the attritional loss ratio for the current underwriting year (2019) when compared to the 2018 underwriting year at the same point in time. Taken together, these changes reflect the strengthened underwriting discipline being applied in 2019.
Lloyd's operating expense ratio has seen a 1.2% reduction in the period, from 39.3% in 2018 to 38.1% in 2019. Lower administrative expenses, reflecting the continued effort by the market to manage its controllable costs, contributed a 1.5% reduction whilst there was a small increase, 0.3%, in the acquisition cost ratio from changes in the mix of business.
John Neal, Lloyd's Chief Executive Officer, said: "We are pleased to report a profit during the first six months of 2019. It is encouraging that the Lloyd's market is showing increased discipline in 2019 as evidenced by a reduction in gross written premiums and an improvement in the attritional loss ratio for the current underwriting year. However, we recognise the importance of continued focus on performance management to maintain this momentum throughout the rest of 2019 and beyond.
"At the same time as ensuring that our market can deliver sustainable, profitable growth, we need to make some brave choices on how to meet the expectations of our customers and all our stakeholders in the future. The Future at Lloyd's strategy will ensure that our marketplace is ready for these challenges and opportunities ahead of us, with the first blueprint to be published on 30 September.
"Lloyd's has also not hesitated to put in place a robust set of actions to tackle unacceptable behaviour around the market and ensure that we set the tone for a culture that encourages the brightest minds to remain in and join our industry. The centrepiece of these actions is the Lloyd's market-wide culture survey which has built the most comprehensive picture ever commissioned of the culture across the insurance industry. We will be announcing the results of that survey and the actions that we will be taking at the Dive In Festival on 24 September."