With interest rates remaining higher for longer, Lloyd's is looking to achieve another year of strong overall earnings this year, according to Mr Tim Prince, director, analytics, at AM Best.
In the Best’s Market Segment Report, “Lloyd’s Market Delivers Robust Underwriting Results Amid Strong Pricing Conditions”, Mr Prince said, “Good overall rate adequacy is expected to persist, and the market continues to focus on prudent risk selection. Underwriting results for 2024 are likely to remain strong.”
“However, good overall rate adequacy is expected to persist, and the market continues to focus on prudent risk selection. Underwriting results for 2024 are likely to remain strong but will be subject to natural catastrophe claims experience in the remainder of the year.”
However, after an exceptional reinsurance rate strengthening in 2023, there are signs of moderating pressures in certain lines in 2024. Underwriting results will be subject to natural catastrophe claims experience in the remainder of the year, he said.
Lloyd’s reinsurance business grew strongly in recent years, with a five-year compound average growth rate of 9%. In 2023, the market’s reinsurance premiums grew by 12.8%, driven by material growth in property and specialty lines, and benefitting from a strong risk-adjusted rate change. Nonetheless, casualty reinsurance has been the fastest-growing line in Lloyd’s reinsurance business over the past five years, with a compound annual growth rate of 15%.
Lloyd’s is a leading player in the global reinsurance space and reinsurance represents its largest segment, accounting for 33% of its gross written premium in 2023. Lloyd’s underwriting performance is subject to volatility due to the nature of business underwritten; however, according to the report, the market continues to outperform the US and Bermudian reinsurance markets in terms of loss experience.