Lloyd’s of London said on Thursday that it swung to a full-year loss as the value of its investment portfolio declined.
The group swung to a pre-tax loss of £769m from a profit of £2.3bn a year earlier. It said rising interest rates in 2022 led to “significant” valuation losses across the portfolio, driving reported net investment losses and an overall loss.
Lloyd’s reported net investment losses of £3.1bn, “driven by the turbulence experienced in the financial markets” last year.
“2022 was an exceptionally turbulent year for risk assets, driven by rising interest rates, as central banks have taken action to contain the increasing levels of inflation caused by supply chain disruption, the war in Ukraine and political uncertainty,” it said.
“The US Federal Reserve raised rates by 425 basis points over the course of the year to 4.5%, at times at a pace of 75 basis points. The Bank of England, which actually started increasing rates at the tail end of 2021, raised rates by 325 basis points to close the year at 3.5%. The pace of rate increases caused a major re-pricing across all asset classes.”
Lloyd’s said assets from investment grade fixed income bonds to equity markets generated significant negative total returns, with long-duration assets the most affected.
