Lloyd’s profits surge as Tiernan charts course for ‘efficiency’ era
Lloyd’s of London has reported a pre-tax profit of £10.6bn, over a 10 per cent increase from the previous year, as its chief executive launches its new five-year strategy.
Its gross written premiums climb to £57.9bn, up over 4 per cent. This was driven by volume growth as new syndicates joined the market; however, for the first time in several years, Lloyd’s saw prices decrease by 3.7 per cent, offset by a 10.3 per cent increase in volume.
The home to the world’s largest reinsurance market reported investment returns jumped to £6bn, up from £4.9bn, as falling interest rates boosted bond values and equity market performance.
The results showed that investment returns, which made up part of the year’s profit, jumped to £6bn, up from £4.9bn, as falling interest rates boosted bond values and equity market performance.
Despite a more competitive pricing environment, the market maintained a combined ratio of 87.6 per cent, slightly higher than in 2024 (86.9 per cent), but anything under 100 per cent is a profit.
“Supported by a very strong balance sheet, these results provide a firm foundation for the challenges and risks ahead, enabling the market to support communities, businesses and economies through periods of uncertainty,” explained chief executive Patrick Tiernan.
Tiernan unveils new strategy
The marketplace also launched its new strategy to maximise Lloyd’s “unique capital advantage”.
This is Tiernan’s first strategy as chief executive, following his May appointment to replace John Neal, and marks the plan for the marketplace moving from its ‘recovery’ era under Neal to the ‘efficiency’ era under Tiernan.
Tiernan’s test will be to find this new era after the marketplace struggled with modernisation.
The new strategy focuses on underwriting excellence, operational efficiency, capital optimisation, and talent retention. The move comes as pricing becomes more competitive; Lloyd’s is seeking to pivot itself to focus strictly on sectors where “rate adequacy” is highest.
“This is how we will advance and protect Lloyd’s as the pre-eminent global marketplace for insurance risk,” added Tiernan.
Commenting on the new strategy, the chief executive of the London Market Group, Caroline Wagstaff, said, “I am particularly pleased to see the commitment by the corporation to double their early careers intake. To continue to grow the London market, we must have talented teams in place and fully trained, and that takes time.”
London’s specialty (re)insurance market employs around 61,000 people, but despite this, the sector is facing a ‘critical’ talent shortage, with the average age expected to increase to 46 years in 2034.
Sheila Cameron, chief executive of the Lloyd’s Market Association (LMA), noted: “Lloyd’s has indicated a clear and coherent direction of travel, one that focuses on the fundamentals of Lloyd’s and plays to its strengths of advancing and protecting the market. This strategy enables and serves Lloyd’s core stakeholders, the managing agents.”
“We believe this new direction will help Lloyd’s managing agents to deliver better and more efficient outcomes for their own clients, the policyholders,” she added.