Howden Re’s market update on Lloyd’s of London: Transformative growth in a market underpinned by investor confidence and robust management
Howden Re’s market update on Lloyd’s of London investigates the marketplace’s transformation from a period of significant losses to one of robust profitability from 2021-2023. With a strong foundation, high investor confidence, positive market outlook, and commitment to innovation, Lloyd’s is poised for continued success in the years ahead.
Howden Re has a seasoned team of experts in the Lloyd’s Market, supporting the ambitions of clients across reinsurance, M&A, capital raising and legacy.
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Core takeaways from the report:
Unprecedented growth and profitability, enhanced by Lloyd’s unique structure
In 2023, Lloyd’s posted its strongest underwriting performance since 2006 and the highest profit in the marketplace’s history:
Net combined ratio: 84%
Total return on capital: 25%
Profit before tax: £10.7bn
These results were due to excellent underwriting performance, coupled with strong investment returns.
From 2021-2023, Lloyd’s GWP CAGR has been approximately 15%, with two-thirds of this growth driven by underlying rate strengthening. This rate-driven growth has enabled Lloyd’s to maintain a sub-50% attritional loss ratio for three consecutive years, enhancing its ability to absorb outsized natural catastrophe losses while still delivering industry-leading results.
Bill Cooper, Managing Director at Howden Capital Markets & Advisory, commented, “Over the last 2 years there has been a notable increase in interest in Lloyd’s from the wider insurance industry and the investor community and we expect this to continue given the underlying strengths of the market and its prospects for the future.”
Lloyd’s unique structure, which includes the benefits of mutuality and the ability to leverage and structure capital deployment to boost returns, contributed to a market-wide return on capital of approximately 25% in 2023, the highest since the years following Hurricane Katrina.
Investor confidence returns
Lloyd’s has attracted a high calibre of entrants in recent years, including some of the most seasoned sector investors and participants such as Aviva, Bain Capital, Blackstone, CVC, Fidelis, JC Flowers and Stone Point. This vote of confidence in Lloyd’s future prospects has been reinforced by credit rating agencies upgrading their view of Lloyd’s.
Howden Re has played a key role in in a significant number of recent market transactions, including CVC’s acquisition of a majority stake in Dale Underwriting Partners , and the establishment of 3 new Lloyd’s platforms for the 2024 YOA.
A marketplace driven by aspiration and commerciality
Robust oversight by Lloyd’s senior management has been coupled with a commercial and ambitious outlook, positioning Lloyd’s as not only the global hub for underwriting excellence but also at the forefront of innovation and advancement within the sector.
Looking ahead
Lloyd’s is extremely well positioned for the next phase of the P&C insurance cycle, with strong risk management oversight in place, but also encouraging signs that sustainable growth can be achieved given the number and quality of new businesses and investors now involved in the Market.
Bradley Maltese, CEO of UK & Global Specialties at Howden Re, said: “Lloyd’s has dealt with the past, managed down costs and expenses, and positioned itself once more as a centre of innovation and excellence. There have been vast improvements in the performance of individual syndicates, with new entrants offering diversity in class of business and innovation which is appealing to investors. The market delivered excellent returns in 2023 and is positioned extremely well for future profitability.”
Lloyd’s reports strong preliminary results for Full Year 2023
Lloyd’s, the world’s leading marketplace for insurance and reinsurance, today provided a trading update[1] for its 2023 Full Year (FY23) financial performance. The full results will be released on 28 March 2024, accompanied by guidance on expectations for Lloyd’s Full Year 2024 results.
Key FY23 figures (unassured):
Gross Written Premium increased by 11.6% to £52.1bn (FY 2022: £46.7bn) reflecting 4% organic growth and 7% price change.
The market’s combined ratio improved 7.9 percentage points from the prior year to 84.0% (FY 2022: 91.9%).The attritional loss ratio remained stable at 48.3% (FY 2022: 48.4%), while the expense ratio remained flat at 34.4% (FY 2022: 34.4%).
Investment return of £5.3bn (FY 2022: loss of £3.1bn), reflects the higher interest rate environment and the unwind of the Mark to Market accounting treatment on fixed income portfolios.
Underwriting profit increased £3.3bn to £5.9bn (FY 2022: £2.6bn).
[1] The information included in the trading update is subject to the completion of on-going assurance procedures performed on the Pro-Forma Financial Statements by Lloyd’s auditors and approval by the Council of Lloyd’s.
“2023 was an outstanding year for the Lloyd’s market. We continued to see sustainable, profitable growth and performance, leading to our best underwriting result in recent history and a rock solid balance sheet that gives us and our stakeholders confidence in an uncertain environment.
We will maintain our focus on underwriting and capital discipline and we look forward to announcing our full results and strategic progress later this month.”
Burkhard Keese, Lloyd’s CFO
Lloyd’s will announce its final 2023 Full Year financial results on 28 March 2024 following completion of the relevant audit and assurance work and approval by the Council of Lloyd’s.
Ζημιές προ φόρων στο α΄ εξάμηνο για την Lloyds of London
Ζημιές προ φόρων 438 εκατ. στερλίνων (569,4 εκατ. δολαρίων) για το α΄ εξάμηνο του 2020 έναντι κέρδη 2,33 δισ. στερλίνων την αντίστοιχη περίοδο πέρυσι ανακοίνωσε ο βρετανικός ασφαλιστικός κολοσσός Lloyds of London.
Τα μεικτά εγγεγραμμένα ασφάλιστρα αυξήθηκαν στα 20,45 δισ. στερλίνες από 19,69 δισ. στερλίνες στο α΄ μισό του 2019.
Η ασφαλιστική αναμένει να πληρώσει 5 δισ. στερλίνες σε αποζημιώσεις σε πελάτες που υπέστησαν ζημιές εξαιτίας του κορωνοϊού.
«Τα αποτελέσματα α΄ εξαμήνου δείχνουν ότι η ισχυρή μας προσέγγιση στη διαχείριση επιδόσεων έχει ξεκινήσει να ισχύει», ανέφερε ο διευθύνων σύμβουλος John Neal.