Lloyd’s of London CEO John Neal has cautioned that rising UK taxes could deter investment, just as the insurance market enjoys its best underwriting conditions in over a decade, The Financial Times has reported.
Speaking ahead of the upcoming Budget, Neal urged the government to be “careful” with taxation levels, warning of possible negative consequences for the industry.
Lloyd’s reported a pre-tax profit of £4.9 billion for the first half of 2024, up from £3.9 billion in the same period last year. The increase in profitability came despite a £500 million loss related to the Baltimore bridge collapse and a smaller impact from the Taiwan earthquake in April, thanks to relatively quiet hurricane activity.
The report said that Neal’s comments come at a time of heightened concern within the business community about the UK’s tax policies, with many industry leaders urging the government to maintain a competitive edge in global markets.
Neal also told the FT that insurers and reinsurers were “beginning to show our mettle to investors” with stronger returns on capital, but had to “carry on for another few years” demonstrating their profitability. “It’s not one and done.”
Business leaders are increasingly concerned about a potential tax hike in next month’s Budget under the Labour government and its impact on the UK’s financial hub. Lloyd’s, a key pillar of London’s financial centre, plays a vital role as a centuries-old marketplace where brokers present a wide array of risks—from credit facilities to supertankers—to be underwritten by more than 50 insurers and reinsurers.
Neal said: “We’ve got to be careful [on tax]. I worry about businesses wanting to list in the UK and wanting to be formally established here.” He went on to say that the difficulties could arise if: “a combination of corporation tax and personal tax was at a level that it made the UK a very difficult place to domicile, to do business”.
London’s insurance market experienced strong growth in the first half of 2024, with Lloyd’s reporting a 6.5% increase in gross written premiums to £30.6bn, excluding currency fluctuations. The growth was driven by increased insurance sales at slightly higher prices, continuing a trend of favorable underwriting conditions not seen since 2007.
Lloyd’s combined ratio—a key profitability metric that compares claims and expenses to premiums—improved to 83.7% from 85.2% in the same period last year. The market also benefited from higher investment returns, boosted by rising interest rates on fixed-income assets and gains in equity markets.
The Treasury said: “Following the spending audit, the chancellor has been clear that difficult decisions lie ahead on spending, welfare and tax to fix the foundations of our economy . . . Decisions on how to do that will be taken at the Budget in the round.”
Original source: The Financial Times
