Lloyd’s market message Q1 2024

Posted 08/03/2024 – Quick takes

The executive team of Patrick Tiernan, Chief of Markets, Kirsten Mitchell-Wallace, Director of Portfolio Risk Management, and Burkhard Keese, Lloyd’s Chief Financial Officer delivered the Q1 Lloyd’s quarterly market message on 7th March. Lloyd’s had released the preliminary 2023 full year’s results earlier in the day and the focus of the message was to provide an update on the Lloyd’s financial results and the disciplined approach to financial growth, increased agility and transparency.

The overall message for the market was that whilst the 2023 year results were very strong, this was due to it being a light catastrophe year and the market should maintain its discipline to deliver value and sustained profitability.


Patrick Tiernan, Chief of Markets, opened the meeting to talk through the preliminary results. Gross written premiums in 2023 reached £52bn, a little short of the target £54bn due to a reduced volume of D&O income written and negative rating in the cyber market. 2023 saw premium increase of 4% from exposure growth and 7% from rate increases (as compared with £47bn of gross written premium, exposure growth of 4% and rate increases of 8% in 2022). The average 7% rate increase achieved in 2023 was again above plan.

The market reported an excellent combined ratio of 84.0% ,which included a major claims ratio of just 3.5 points, down from 12.7 points in 2022. This was despite global major losses of in excess of $100m for the fourth consecutive year but no losses were of any great significance to the Lloyd’s market. The attritional loss ratio of 48.3% and the expense ratio of 34.4% were similar to those reported in 2022. The 5-year average combined ratio (ex-COVID) was reported to be 96.4%.

Patrick reported that the return on capital for 2023 was a very strong 25% but that the seven-year return on capital was just 3.6%, as compared with a 14% average return on capital for the years 2004 – 2016 so Lloyd’s must not be complacent after a singular profitable year.  We were advised that risk factors remain elevated and strong underlying rate adequacy is needed to enable sustained underlying performance.


Kirsten Mitchell-Wallace, Director of Portfolio Risk Management, reported on Lloyd’s increased focus on non-peak perils. These used to be named secondary perils, but Lloyd’s feels these exposures, including US severe convective storms, US wildfire, US flood and New Zealand Earthquake, are material exposures to the market and need increased oversight. They also commented that scientists are debating whether there is the need for a newly defined category 6 hurricane if US windspeeds exceed those already seen to date, so there is no room for complacency. We were also advised of the increased focus on cyber RDSs. Whilst some cyber underwriters in Lloyd’s have world class capability, some underwriters are still playing catch up and emphasised the importance that these syndicates do improve their cyber underwriting. Lloyd’s will continue to focus on ensuring cyber is profitable across the rating cycle, with a requirement for good aggregation management and adequate capitalisation of cyber exposures before a major cyber catastrophe occurs, rather than in response to it. Lloyd’s will also be focussing on developing insights and market intelligence.


Burkhard Keese, Lloyd’s Chief Financial Officer, then advised that Lloyd’s had been upgraded by Standard & Poor’s (S&P) to ‘AA–’; outlook stable, from ‘A+’; outlook stable and suggested that AM Best may also upgrade the market financial rating in the future. He reiterated that the exceptional results for 2023 should not be viewed in isolation but in the context of an average 3.6% return on capital between 2017 and 2023. He also advised that whilst the market benefits from a strong investment return, in the context of inflation the real interest rate is far lower at 0.9%. He advised that the market’s reserve margin is at its highest level, meaning that we can more easily absorb unforeseen events. He believes that the market has handled the pressures on the D&O market and the cyber market well over the last 12 months.

Burkhard reported that London Bridge has raised over $750m in capital to support underwriting at Lloyd’s since inception including the recent Beazley cat bond. He also reported that little additional insurance capital had flowed into the insurance industry and a number of initiatives had to be abandoned. He urged market participants not to allow rate reductions going forward.

For 2024, there will be a focus on cost reduction for doing business at Lloyd’s and a transparency to investors. There will be some reduction in the burden of data reporting to Lloyd’s and a focus on Lloyd’s Corporation charging structure to make it simpler and cheaper to transact business at Lloyd’s. They will be working on new Lloyd’s classes of business reporting and they will be publishing Lloyd’s EP curves (probability of profitability).


Patrick then summarised the key takeaways from the message – Lloyd’s will continue to focus on performance. Additional peak perils are being closely monitored and growth must still be disciplined. This will help sustain market profitability.

Alpha comment

The message given to the market was clear. The market needs to continue to focus on rate adequacy and risk management in order to maintain and sustain profitability. We must not be complacent about the excellent 2023 results, which are an anomaly,  and allow rate reductions, albeit that it is inevitable that increased competitive pressure will mean that rates are unlikely to increase much further beyond current levels. There remains significant uncertainty, with a particular focus on cyber exposures as well as rating, and the increased focus on non-peak perils seems sensible when we have seen such perils contributing significantly to the annual global impact of major losses which remains as high as ever.  We must, as ever, continue to maintain discipline in the market. The recording of the meeting can be viewed here.

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