Lloyd’s of London will pay staff earning less than £75,000 ($86,306) an extra £2,500 to help cover rising living costs as UK inflation hits multi-decade highs.
John Neal, chief executive officer at the insurance exchange, said he wrote to staff Wednesday announcing the extra pay.
“We are trying to think about our cost base and we are thinking about our employees who will be most affected,” he said in an interview.
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Companies across Europe have been grappling with rising costs as the war in Ukraine sent energy prices soaring. Lloyd’s own energy bill for its 350,000 square-foot landmark headquarters in the City of London is rising 250% to a seven figure number, Neal said.
A consequent rise in interest rates to combat inflation contributed to a loss of £1.8 billion in the first six months of the year at Lloyd’s, Neal said. The decline in profit was attributed to a net investment loss of £3.1 billion from unrealized mark-to-market losses, down from income of £600 million made the year before, the firm said in a statement Thursday.
Neal said the loss was mainly due to the value of fixed-income holdings being marked down as rates were hiked. Lloyd’s reported a £1.4 billion profit over the same period last year.
The insurance market faces a variety of challenges in the shape of the war in Ukraine, ongoing fallout from the pandemic as well as rising inflation. The exchange said it had put aside £1.1 billion for claims associated with the war in Ukraine.
That number was an estimate of potential claims and might not be needed, Neal said in the interview. To date, claims equal to just 4% of that amount had been filed, he said.
“The situation is still under play so it is too early for individuals to assess what loss they have suffered and make a claim,” Neal added.
Photograph: The Lloyd’s of London Ltd. building in the City of London/Bloomberg
Copyright 2022 Bloomberg.
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