Annual profits soar at Lloyd's of London

(Sharecast News) - Annual profits topped £10bn at Lloyd's of London, the centuries-old insurance marketplace confirmed on Thursday, as companies sought out protection from extreme weather and heightened geopolitical tensions. Gross written premiums at the specialist insurance marketplace, which was founded in a coffee shop in 1680s, rose 4.2% to £57.9bn last year, after volume growth of 10.3% helped offset a 3.7% decline in prices.

Underwriting profits dipped to £5.2bn from £5.3bn, while the combined ratio - a measure of claims and costs as a percentage of premiums - rose to 87.6% from 86.9%.

However, pre-tax profits jumped 10.1% to £10.6bn, helped by a 5.6% return on net investment and reduced major losses.

Major claims totalled £2.4bn net of reinsurance, down from £3.2bn in 2024. Lloyd's said: "The year was marked by several severe events, including Hurricane Melissa, which, despite their wider human and environmental impact, did not generate material insured losses for the market."

The biggest material loss came from the Californian wildfires in the first quarter, which contributed around £1.6bn to the total major loss.

Chief executive Patrick Tiernan said: "The market maintained underwriting discipline, delivered innovative structured solutions and benefited from a conservative investment policy.

"The balance sheet remains very strong, positioning the market well for the next phase of the cycle."

Former chief of markets Teirnan - who was appointed in June last year - also unveiled a five-year strategy following a review of the business. "We are performing well," he said, "but we are not yet performing at our full potential."

Under the plan, Lloyd's will focus on its underwriting performance as well as improving efficiency and maximising its "unique capital advantage".

Tiernan told the Financial Times that while Lloyd's would continue to focus on traditional markets such property insurance, it would also seek to take on more risk in areas such as energy, artificial intelligence and data centres. "We are open to all risks that can be legal insured."

Lloyd's has already stated it will continue to offer insurance to shipowners looking to pass the stricken Strait of Hormuz.

Chair Charles Roxburgh said: "We are acutely aware of the conflict in the Middle East, and are deeply mindful of the human consequences. In situations such as this, the value of Lloyd's is clearly demonstrated as a stable and financially strong marketplace."