Lloyd’s full year results for 2024

Lloyd’s has published its full year results for 2024. We previously reported the preliminary results here.

Headline figures

• Gross written premium increased by 6.5% to £55.5bn (2023: £52.1bn) reflecting 8.5% of growth and +0.3% rate increase, offset by foreign exchange rate movements of -2.3%.
• The combined ratio deteriorated by 2.9 percentage points to 86.9% (2023: 84.0%).
• The attritional loss ratio improved by 1.2 points to 47.1% (2023: 48.3%) while the expense ratio remained flat at 34.4% (2023: 34.4%).
• Underlying combined ratio of 79.1% (2023: 80.5%).
• Investment return of £4.9bn (2023: £5.3bn), with the portfolio benefiting from another year of high interest rates, notwithstanding some market volatility in the fourth quarter.
• Underwriting profit of £5.3bn (2023: £5.9bn).
• Profit before tax reduced to £9.6bn (2023: £10.7bn).
• Total capital, reserves and subordinated loan notes of £47.1bn (2023: £45.3bn).
• Central solvency ratio of 435% (2023: 503%).

John Neal, CEO of Lloyd’s said:

“The Lloyd’s market has delivered another year of outstanding financial performance, with a superb combined ratio, underlying combined ratio and attritional loss ratio supporting a capital position and claims reserve strength that is as strong as it has ever been. This excellent result demonstrates the market’s ability to deliver sustainable and attractive returns for investors, and provide solutions to protect our customers’ balance sheets. I would like to congratulate members of the market for their disciplined underwriting and profitable growth and thank Corporation employees for their commitment and support in 2024.”

It was noted that the market delivered an underlying combined ratio (before major losses) of below 80%. This is a target for the market so that it can ensure resilience to withstand the impact of major losses.

Major catastrophe losses in 2024 totalled 7.8% (2023: 3.5%) which included the impact of the Baltimore Bridge collision (£0.4bn and Hurricanes Beryl, Helene and Milton (total £2.3bn). Reserves for the trapped aircraft in Russia have been increased by £556m with reserves for the conflict in Ukraine now totalling £2.4bn, 50% of which are related to the aviation market.

We were advised that the market’s reserve margin has increased to £5.4bn (2023: £4.6bn) which includes £600m for COVID-19.

Results by line of business

The classes of Specialty Reinsurance and Marine, Aviation and Transport were impacted by prior year reserve deterioration driven by Aviation, particularly in relation to the Ukraine conflict. Casualty Reinsurance required strengthening of reserving due to increased uncertainty in relation to claims inflation, particularly due to factors such as legal system abuse.

Almost all classes of business saw marginal rate increases of up to 5% with the exception of Casualty which saw overall rate reductions of up to -5%. Overall rate change was +0.3%.

2025 outlook

Lloyd’s reported that the outlook for 2025 was for premium to grow from £55.5bn to £60.0bn (+/- 5%). Whilst rates are not expecting to increase further, much of the growth is expected to come from inflation of values. The market will continue to support disciplined ambition and there remains appetite for more reinsurance business to be written at high attachment points. A combined ratio of 90-95% continues to be targeted for a ‘normal’ loss year (although this continues to seem quite modest) together with a 4% investment return.

The arrival of Fidelis and Aviva contributed to the growth in 2024 and Oak Re and Convex will further add to expected market premium for 2025. There was also an acknowledgement that the introduction of ‘modified’ freehold capacity arrangements for capital providers had been an encouragement for new business to be provided by private capital.