Lloyd’s of London, the world’s oldest insurance market, expects to incur losses of about $2.3 billion from the Californian wildfires, according to its preliminary 2024 results.
While such claims will dent profits next year, Burkhard Keese, Lloyd’s chief financial officer, stressed that it would not be a “capital event” and should not erode the market’s overall capital reserves.
Overall, Lloyd’s reported gross written premiums of £55.5 billion, a rise of 6.5 per cent year on year, helped by strong performances in property and reinsurance. However, higher second-half claims pushed the market’s combined ratio (a key measure of underwriting profitability) up by two percentage points to 86.9 per cent. A reading below 100 per cent signifies an underwriting profit.
At the same time, Lloyd’s profit before tax slipped to £9.6 billion from last year’s record £10.7 billion, while underwriting profit fell to £5.3 billion from £5.9 billion. Despite the drop, the figures significantly surpass the £2.6 billion underwriting profit it posted in 2022, reflecting how 2023 was an exceptional year.
The market’s investment return also came in lower at £4.9 billion, compared with £5.3 billion in 2023, though Lloyd’s said it benefited from relatively high interest rates over the period. Citing a continued focus on “strong profitability and disciplined growth,” Keese emphasised that the market had “delivered another excellent underwriting year” for investors while offering “best in class solutions” to customers.
Full results and guidance for 2025 will be published next Thursday, with both underwriters and brokers watching closely for any updates on how Lloyd’s will address future catastrophe risks and maintain its strong capital position.
