Lloyd’s 2024 Financials Reflect Impact of Major Catastrophe Events, Though Underwriting Discipline Remains
Lloyd’s, the prominent re/insurance market, posted a pre-tax profit of £9.6 billion for 2024, a decrease from £10.7 billion in 2023. This decline was largely attributed to a rise in the claims ratio, significantly influenced by several large-scale catastrophe events that occurred during the year.
The major claims ratio increased to 7.8%, reflecting the financial impact of events like hurricanes Milton and Helene, along with the Baltimore Bridge collision. However, Lloyd’s emphasized its commitment to profitability, maintaining a stable expense ratio of 34.4%. The underwriting result also saw a decrease, at £5.3 billion compared to £5.9 billion the previous year.
Despite these challenges, Lloyd’s demonstrated resilience with an improved attritional loss ratio of 47.1%, down from 48.3% in 2023. Prior year releases were reported at 2.4%, slightly higher than the 2.2% recorded in the previous year. In addition to the full-year results, Lloyd’s previously estimated net losses of approximately US$2.3 billion from the California wildfires, based on available information at the time.
Gross written premium for 2024 rose to £55.5 billion, up from £52.1 billion in 2023, representing a 6.5% increase. Growth was primarily driven by an 8.5% increase in volume. This included a 7.6% rise from existing syndicates plus 0.9% from new entrants. Increased rates added 0.3%, although foreign exchange movements reduced the increase by 2.3%.
The overall combined ratio stood at 86.9%, compared to 84.0% a year earlier. The underlying combined ratio improved to 79.1% from 80.5%. Investment returns totaled £4.9 billion, also down from £5.3 billion in 2023. Lloyd’s attributed this decline to mark-to-market losses resulting from fourth-quarter market volatility. Despite this, performance was supported by higher interest rates throughout the year.
Lloyd’s central solvency ratio was 435%, down from 503% the prior year. The market cited continued growth and capital management initiatives aimed at reducing debt as contributing factors. The renewal of the Central Fund cover in 2024 was also noted as part of its strategy to maintain long-term market stability and financial strength.
Following an upgrade by AM Best in 2024, Lloyd’s financial strength ratings reached their highest levels to date. All four ratings now stand at AA- or equivalent.
Lloyd’s CEO John Neal highlighted the market’s strong financial performance, emphasizing underwriting discipline and capital strength, despite the reported decrease in profits. The market’s focus on expense control and pricing discipline played a role in supporting stability.
