Lloyd’s ‘comfortable’ with targets despite $2.3 billion wildfire loss

Lloyd’s of London is maintaining its 2025 growth and profitability targets despite market softening and large losses from the California wildfires in the first quarter.

Lloyd’s expects losses from the January fires to total about $2.3 billion, representing almost half of its annual catastrophe loss budget, or five percentage points of its combined ratio. Despite the unusually large losses at the start of the year, Lloyd’s is sticking to its guidance of $60 billion in premium and a combined ratio of 90% to 95% for 2025, said Alexandra Cliff, the market’s deputy chief financial officer.

“We remain very comfortable in the outlook we have given,” she said at Lloyd’s results presentation Thursday.

Lloyd’s is targeting gross written premium of $60 billion in 2025, up from its 2024 target of $57 billion, plus or minus 5%. Lloyd’s reported $55.5 billion in gross written premium last year, which was at the lower end of its forecast.

Lloyd’s expects much of its 2025 premium growth to come from its largest market in the US but also from Europe, said its outgoing CEO John Neal.

“The penetration of the purchase of insurance is twice what it is in the U.S. as it is everywhere else in the world. We are seeing a lot more go into the surplus market than ever before, and therefore, we would expect growth pointedly to come from the US. We are very encouraged by what we are seeing coming out of Europe with our subsidiary there and the significant double-digit growth we are seeing year on year,” Mr. Neal said.

Lloyd’s continues to target premium growth in a market that is beginning to see reinsurance and insurance rates soften, particularly for property, cyber liability and directors and officers liability insurance. Most of Lloyd’s premium growth in 2024 came from increased volume, especially in property insurance and reinsurance. Just 0.3 % of its 6.5% premium growth last year was attributed to price increases.

“There are some areas where underwriters can afford to give some price, and there are many other areas where they need to take price,” Mr. Neal said. “So the broad assumption is that there will be some pressure on price, but not a lot.”

Lloyd’s underwriting result dipped to £5.3 billion ($6.85 billion) in 2024 while the combined ratio deteriorated 2.9 percentage points to 86.9%.

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