Lloyd’s of London Stays Firm on 2025 Goals Despite Early Setbacks

Lloyd’s of London is resolutely upholding its growth and profitability objectives for 2025, even in the face of market softening and substantial losses stemming from the California wildfires in Q1. Lloyd’s anticipates losses from the January fires to be approximately $2.3 billion, nearly half of its annual catastrophe loss budget, equivalent to five percentage points of its combined ratio. Despite these significant early losses, Lloyd’s remains committed to its forecast of a $60 billion premium and a combined ratio between 90% and 95% for 2025, as stated by Alexandra Cliff, the deputy chief financial officer of the market, during Thursday’s results presentation.

Lloyd’s aims for gross written premiums to reach $60 billion by 2025, an increase from its 2024 target of $57 billion with a potential variation of 5%. In the previous year, Lloyd’s reported $55.5 billion in gross written premiums, which was at the lower end of its projections.

Lloyd’s foresees a significant portion of its 2025 premium growth deriving from its largest market, the United States, along with notable contributions from Europe, according to outgoing CEO John Neal. “The insurance penetration in the U.S. is twice as much as it is elsewhere globally. We are witnessing substantial inflows into the surplus market more than ever before. Consequently, we anticipate growth to be notably driven from the U.S., and we are very optimistic about the double-digit growth emerging from our European subsidiary year-on-year,” Mr. Neal remarked.

While Lloyd’s pursues premium growth, it is navigating a market where reinsurance and insurance rates are beginning to soften, particularly in sectors such as property, cyber liability, and directors and officers liability insurance. The majority of Lloyd’s premium growth in 2024 was due to increased volume, particularly in property insurance and reinsurance. A mere 0.3% of its 6.5% premium growth last year was due to price hikes.

“There are sectors where underwriters can afford to reduce prices, while in many others, they need to increase them,” Mr. Neal observed. “Overall, there may be some pricing pressure, but it is not expected to be substantial.”

Lloyd’s underwriting result decreased to £5.3 billion (approximately $6.85 billion) in 2024, with the combined ratio worsening by 2.9 percentage points to 86.9%.

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