Lloyds of London warns on Brexit as it reports first half earnings

Lloyds of London warned that Brexit poses a “major issue” for the insurance market as it reported its first half earnings.

Pre-tax profits jumped 22% to £1.46bn in the first half, boosted by a stronger dollar following the EU referendum and higher investment returns.

Investment returns grew to 1.8% from 0.6% the same period a year earlier. Return on capital edged up to 11.7% from 10.7%

However, chairman John Nelson said in a statement: “Clearly the UK's referendum on its EU membership is a major issue for us to deal with and we are now focusing our attention on having in place the plans that will ensure Lloyd's continues trading across Europe."

Nelson said while Lloyds is operating in difficult conditions, the group has made “significant progress” in expanding into fast-growth markets across the globe.

This year Lloyds has applied for onshore reinsurance licences in India and Malaysia. It has also opened a new office in Bogota, Colombia. “This complements the growth we are seeing in Dubai, China and in our more traditional markets, particularly the US,” Nelson said.

Separately, Nelson told Reuters that Lloyds has made plans to move some of its businesses to the EU by the time Britain begins its Brexit negotiations, which are expected to begin early next year.

"Our aim is to have a contingency plan so we can write business onshore in the EU ready by the time Article 50 is triggered," Nelson told the news agency.

Lloyds earlier this month said it would have to operate some business from the EU after Article 50 is triggered if the UK government fails in its negotiations to keep passporting rights, which allow financial companies to sell products across the bloc.