John Neal Stresses Underwriting Discipline for Lloyd’s

John Neal, Chief Executive Officer (CEO) of the Lloyd’s insurance and reinsurance marketplace, has highlighted the critical need for maintaining underwriting discipline, even as the market anticipates some pressure on pricing through 2025. During a media call discussing Lloyd’s impressive 2024 performance, which boasted a profit of £9.6 billion and an underlying combined ratio of 79.1%, Neal shared insights on pricing expectations for the coming year.

“Price is an interesting one,” remarked Neal. “Honestly, there are areas where underwriters might afford some price concessions, but in many sectors, maintaining or increasing pricing is crucial. Although there may be some pressure, it won’t be significant.”

Despite higher losses from major claims, Lloyd’s secured a solid underwriting gain of £5.3 billion in 2024, primarily driven by strong results in the reinsurance and property segments. This was partially offset by challenges in the casualty and aviation sectors. The elevated loss experience included impacts from Hurricanes Helene and Milton and the Baltimore Bridge collapse, raising the combined ratio to 86.9% from 84% in 2023.

However, the underlying combined ratio improved to 79.1% from 80.5% the previous year. Neal emphasized that sustaining such performance requires unwavering discipline in the market. He addressed questions about the impact of Los Angeles wildfires on the 2025 outlook, stating, “Our underlying combined ratio is 79.1%, with an expected large loss ratio close to 11. This normalizes the combined ratio to 90%.”

Neal further elaborated on the importance of maintaining discipline amidst potential buyer-driven rate pressures. He pointed out the complexities of global dynamics, including protectionism and geopolitical tensions, which have heightened risk perceptions among insurance buyers.

“Our growth rate is currently three times that of GDP, with global insurance growing at twice the GDP rate. This indicates ample opportunity for underwriters to accept risk, but only at the right price,” Neal explained. “The market’s discipline in 2023 and 2024 is encouraging, showing adherence to planned pricing strategies. Our team remains vigilant, ensuring the market’s continued discipline in pricing and other critical factors.”