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<\/p>\nThe Lloyd\u2019s executives said the market has continued to demonstrate its value to stakeholders by delivering 6.5% premium growth while maintaining underwriting discipline.<\/p>\n
Lloyd\u2019s saw a continuation of positive returns with profit before tax of \u00a39.6 billion ($12.4 billion) during 2024, down from \u00a310.7 billion ($13.8 billion) in 2023. The market achieved a combined ratio of 86.9% for full-year 2024, compared with 84.0 for FY2023. (A combined ratio below 100 indicates an underwriting profit).<\/p>\n
Lloyd\u2019s Chief Financial Officer Burkhardt Keese said that 2024 was a year when the market once again \u201cproved our underwriting discipline and delivered profitable growth of 6.5%,\u201d or gross written premium totaling \u00a355.5 billion ($71.7 billion), compared with \u00a352.1 billion ($67.3 billion) for FY 2023.<\/p>\n
Keese and Chief Executive Officer John Neal both spoke during a recent media briefing to discuss Lloyd\u2019s full-year results for 2024.<\/p>\n
\u201cLloyd\u2019s has been relentless in pursuing sustainable profitable performance in the market. We\u2019ve been on a seven-year journey to deliver the change our stakeholders wanted \u2013 to consistently focus on the delivery of disciplined underwriting, to modernize our performance and oversight frameworks, to address the cost of doing business at Lloyd\u2019s, and to show leadership on the issues that matter,\u201d said Neal, who will exit the market this year<\/a> to become global CEO of Aon Reinsurance and chairman of Aon\u2019s Climate Solutions unit.<\/p>\n \u201cOur track record since 2017 speaks for itself. To date, we\u2019re reporting a combined ratio for 2024 of 86.9%. We have reduced our underlying combined ratio to 79.1%, (which excludes major claims), or a 16 percentage point improvement on that same ratio from 2019,\u201d Neal said, adding that Lloyd\u2019s strong reserving position continued to support some positive prior year reserve releases, which reduced the 2024 combined ratio by 2.4%.<\/p>\n \u201cThe key components of the combined ratio are moving positively. Importantly, the attritional loss ratio, most directly under the underwriters\u2019 control as they select, manage and price risk, has reduced to 47.1% and is now consistently below 50%. Operating expenses have fallen over the period from 40% [in 2017] to 34% [in 2024], with opportunities to manage this ratio further post digitalization,\u201d Neal added. <\/p>\n The market\u2019s 2024 expense ratio of 34.4 remained flat with 2023, which Keese described as \u201ca small disappointment.\u201d<\/p>\n Most Important Measure<\/strong><\/p>\n Both Keese and Neal focused a lot of their commentary on Lloyd\u2019s underlying combined ratio, which Keese described as \u201cthe most important measure\u2026\u201d<\/p>\n \u201cWith our underlying combined ratio of 79.1%, we have achieved our profitability threshold of 80% for the third consecutive year, proving once again how well our Lloyd\u2019s system works,\u201d said Keese who also is stepping down from his CFO position<\/a> this year.<\/p>\n \u201cAn underlying combined ratio of 80% means that we can absorb losses up to \u00a38 billion [$10.3 billion] net of reinsurance before our underwriting result turns negative [and the combined ratio rises above 100],\u201d said Keese, noting that this allows Lloyd\u2019s to absorb another \u00a34.9 billion ($6.3 billion) of net large losses before it would report an overall loss of net income, Keese explained. \u201cAs our normal net major claims are usually around \u00a34 billion [$5.2 billion], this resilience is reassuring for both our policyholders and capital providers.\u201d<\/p>\n \u201cStrong underwriting discipline is our north star, and we expect the market to consistently target an underlying combined ratio of around 80%. We\u2019ve seen strong performance on both sides of the P&L with the underwriting profit of \u00a35.3 billion [$6.9 billion], complemented by another strong investment return totaling \u00a34.9 billion [$6.3 billion],\u201d Neal said. (The underwriting profit in 2023 was \u00a35.9 billion and that year\u2019s investment return was \u00a35.3 billion).<\/p>\n Keese noted that Lloyd\u2019s profit before tax stands at \u00a39.6 billion, or \u00a31 billion less than reported for 2023, but this decrease was expected after the exceptional year of 2023 when nat-cat activity was relatively low.<\/p>\n While 2024 is the second consecutive year when Lloyd\u2019s reported very high profitability, Keese warned the market shouldn\u2019t rest on its laurels. \u201cWe have not earned our cost of capital over the last seven years, meaning the high profits in 2023 and 2024 were not enough to offset the results since 2018, and I believe it is very much true for the whole industry,\u201d he said.<\/p>\n Return on Capital<\/strong><\/p>\n \u201cThis means we must maintain underwriting discipline. We can all agree that 7.6% of return [on capital since 2018 ] is not sufficient for existing and new investors. Without setting a specific target and depending, of course, on the nature of the book, an investor typically would expect to see 10% to 15% returns,\u201d Keese added. (The 2024 return on capital of 21.0% brings the seven-year average to 7.6%. In 2023, the return on capital was 3.6%).<\/p>\n Keese further explained during the Q&A session that investors need to be paid for their cut of the risks they take. \u201cWe have earned 7.6% return on capital over the last eight years, and we must give the investors a chance to earn that money back. And I think that will force discipline because there\u2019s a certain fatigue still in the investor community of deploying money into the insurance sector.\u201d<\/p>\n Both Keese and Neal expressed confidence that Lloyd\u2019s wouldn\u2019t see widespread rate softening, given investor demand for better returns and the nature of evolving risks.<\/p>\n \u201cWe\u2019re in an unusual world of protectionism, nationalist behaviors and geopolitics,\u201d said Neal. \u201cI mean there\u2019s a whole heap of complexity out there, which \u2026 has heightened the perception of risk amongst the buyers of insurance.\u201d<\/p>\n He noted that Lloyd\u2019s is growing at three times the rate of gross domestic product while insurance globally is growing at twice the rate of GDP. \u201cSo I think there is plenty of opportunity for underwriters to see risk, accept risk, but only accept risk where the price is right.\u201d<\/p>\n Indeed, Neal said the market 2023 and 2024 has shown discipline around the right price for the right risk \u2013 a trend that will likely continue.<\/p>\n \u201cThe 2024 results demonstrate clearly that the Lloyd\u2019s market is in good shape, underpinned by that commitment to performance, discipline and sensible scale,\u201d said Neal in his wrapup commentary. \u201cAnd to remain in this position, we will remain laser focused on underwriting profitability to deliver exceptional value to our market, our investors, and of course to our customers.\u201d<\/p>\n Related:<\/strong><\/p>\n Topics<\/span> Trends<\/a> Excess Surplus<\/a> Pricing Trends<\/a> Lloyd’s<\/a> <\/p>\n<\/p><\/div>\n Was this article valuable?<\/p>\n<\/p><\/div>\n![](\"https:\/\/www.insurancejournal.com\/app\/uploads\/2025\/03\/discipline-must-be-maintained-lloyds-580x304.png\")
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