By Julie Steinberg

 

LONDON--Lloyd's of London, the 332-year-old U.K. insurance and reinsurance market, is set to pay out up to 5 billion pounds, equivalent to $6.5 billion, in coronavirus-related claims this year, it said Thursday.

Lloyd's, a marketplace of insurance syndicates, is the latest in a long list of global insurance entities experiencing contractions amid a surge of claims this year due to the pandemic. Many insurers are also facing losses in their investment portfolios from wild stock markets and falling interest rates, while their solvency ratios, a measure of financial strength, have fallen since the start of the crisis.

Lloyd's reported a pretax loss of GBP438 million in the first half of the year, with Covid-19 claims totalling GBP2.36 billion after reinsurance recoveries. It had reported a pretax profit of GBP2.32 billion in the year-earlier period. It warned earlier this year of tough times to come, both for itself and the industry broadly.

Despite the losses, Lloyd's said Thursday that its balance sheet is in a strong position and that it has the wherewithal to withstand the continuing impacts of the pandemic.

Moody's Investors Service earlier this week changed its outlook on the global reinsurance sector to negative from stable, saying it expected profitability at such firms to lag amid coronavirus-related losses and crimped interest rates.

 

Write to Julie Steinberg at julie.steinberg@wsj.com

 

(END) Dow Jones Newswires

September 10, 2020 06:39 ET (10:39 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
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