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Lloyd’s has fallen to an £877m loss for 2020 and reported its fourth yearly underwriting deficit as Covid-19 claims hit £6.2bn.

The result, which compares to a £2.53bn profit in 2019, comprises an underwriting loss of £2.86bn and net investment income of $2.27bn. Lloyd’s posted an underwriting loss of £538m in 2019.

The market’s combined ratio stood at 110.3 percent last year, compared to 102.1 percent in 2019.

The Covid-19 claims resulted in net incurred pandemic losses of £3.43bn after reinsurance recoveries. These claims added 13.3 percent to Lloyd’s’ combined ratio, which would have hit 97 percent otherwise.

Excluding Covid-19 losses, Lloyd’s said it would have delivered an underwriting profit of £800m.

Major claims totalled £5.97bn last year net of reinsurance and including reinstatements payable and receivable, from £1.8bn in 2019.

With Covid-19 accounting for nearly 60 percent of the major claims, the remainder was mostly from catastrophe events.

Lloyd’s secured premium rate increases of 10.8 percent last year, with rate momentum continuing in the first quarter of 2021.

Gross written premiums (GWP), however, fell a touch to £35.47bn from £35.9bn in 2019.

“Exceptional market conditions, driven by an acceleration in positive rate momentum throughout 2020, saw the market achieve average risk-adjusted rate increases on renewal business of 10.8 percent. This was offset by a 12 percent reduction in GWP due to the remediation of underperforming business in 2020, reflecting the market’s continued focus on the quality of the business it renews and underwrites,” said Lloyd’s.

The market’s expense ratio improved 1.5 percent to 37.2 percent in 2020 and Lloyd’s said it remains a key focus. It added that its Future at Lloyd’s Blueprint Two solutions and delivery programme are central to tackling total acquisition costs and administration expenses.

Lloyd’s’ net resources increased to £33.94bn in 2020, with its central and market-wide solvency ratios at 209 percent and 147 percent respectively.

Lloyd’s CEO John Neal said: “Following an extremely challenging year marked by a global health crisis of a scale never seen before, Lloyd’s continued to support its customers, with payouts expected to total £6.2bn in Covid-19 claims.

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.

“Against this unprecedented backdrop, we have made good progress across our performance, digitalisation and culture-transformation plans. Our disciplined underwriting approach and determination to become the world’s most advanced insurance marketplace have set us up for real success this year, alongside the continued positive rate momentum that will see the market supporting growth for the first time in four years,” he added.