One good year not sufficient to earn back trust of capital: Lloyd’s CFO

Lloyd’s CFO Burkhard Keese has noted that despite stellar underwriting conditions in 2023, very little fresh capital flowed into the insurance market, with many promising capital-raising initiatives having to be abandoned, highlighting the need for the industry to focus more on investor needs.

Keese’s comments stem from Lloyd’s Q1 2024 Market Message presentation, which followed the release of a trading update of the firm’s 2023 financial performance.

On March 7th, the global re/insurance marketplace revealed that its underwriting profit increased by £3.3 billion to £5.9 billion in 2023, while GWP climbed to £52.1 billion, and its combined ratio improved by 7.9 percentage points to 84%.

At the time, Keese hailed 2023 as “an outstanding year for the Lloyd’s market,” adding, “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.”

However, later speaking in the firm’s Q1 2024 Market Message presentation, Keese observed that one good year is not going to be sufficient to earn back the trust of capital.

He went on to note that the insurance and reinsurance market, as well as Lloyd’s, needs to deliver a better service to institutional investors, if it is to prove attractive to them.

“Despite the stellar underwriting conditions very little fresh capital flowed into the insurance and alternative asset markets, and many promising capital raising initiatives had to be abandoned last year. I believe the industry must focus more on investor needs,” Keese said.

He continued, “Clear market prices provide good transparency to investors. This is not easy to achieve, but we must be aware of this request.”

“Complete transparency of fully modelled and validated risk-return profiles are requested by most of our institutional investors and their investment committees. Track records are also needed. Without any doubt, we must deliver adequate returns, which we obviously didn’t do over the last five to seven years.

“Investors will expect them to be able to earn back losses, therefore, price adequacy, and embedding the lessons learned is key.”

This website states: The content on this site is sourced from the internet. If there is any infringement, please contact us and we will handle it promptly.