Chief Executive's statement

Lloyd’s has been on a remarkable journey over the past five years. Our focus on underwriting discipline, profitable growth and digitalisation has enabled us to turn around our market’s performance, reduce cost and complexity, and step up to lead our industry in supporting our customers through a sustained period of uncertainty.

2023 saw Lloyd’s report its best results in recent history, with outstanding performance underpinned by a strong and resilient balance sheet.

The results reflect an uncompromising focus on executing against our strategy, alongside the commitment of our market participants in delivering consistent profitable performance – all of which continues to enhance the value, relevance and long term sustainability of Lloyd’s. They also allow us to show tangible progress on the assignments we were given by our stakeholders back in 2018: to improve performance, reduce the cost of doing business and show leadership on the issues facing society. 

We introduced our four strategic priorities – performance, digitalisation, purpose and culture – to drive execution against those objectives, and we’ve been pleased to see steady progress on all fronts in the years since.

Lloyd’s strong financial results for 2023 demonstrate profitable growth supported by a high quality balance sheet.

Gross written premium grew by 11.6% to £52.1bn, driven by volume growth of 4.3% and price increases of 7.2%. The combined ratio of 84.0% and underwriting profit of £5.9bn represents outstanding underwriting performance, underpinned by a stable attritional loss ratio of 48.3% and expense ratio of 34.4%. Underwriting benefited from lower costs from large risks and natural catastrophe claims, with the underlying combined ratio of 80.5% at a similar level to 2022’s underlying combined ratio of 79.2%.

Investment returns of £5.3bn contributed to an overall profit before tax of £10.7bn – an outstanding result that signals both the strength of our market, and the enduring value of insurance in helping people make more confident risk decisions in the face of uncertainty.

The balance sheet has supported solvency ratios of 207% and 503% (market and central solvency respectively), the quality of which is reflected in our financial strength ratings: with S&P Global upgrading the Lloyd’s market from A+ to AA-, and A.M. Best boosting the market’s outlook to ‘positive’.

Lloyd’s will continue to ensure the market’s performance is underpinned by robust oversight. In 2023, that included a strong focus on our principles-based oversight, where we have engaged with managing agents across their business; from capital requirements and underwriting discipline, to sustainability and culture strategies. This oversight ensures Lloyd’s is positioned to thrive and grow in the years to come.

The market will continue its digital transformation through Blueprint Two in 2024 and 2025, boosting the resilience of the technology and operating frameworks underpinning our market’s trading credentials. The solutions will also equip us to present and utilise much better data and insights throughout the insurance lifecycle: from our investors, insurers and brokers right through to the end customer.

A complex and uncertain external environment has called for the insurance industry to ‘stand up’ in helping people, businesses and governments manage their risk exposures. From climate change to conflict, Lloyd’s stepped up to this role in 2023.

That meant developing innovative solutions to protect customers against new, emerging and systemic risks. Having seen the impact of COVID-19 on our economies, our market continued to provide confidence to governments and businesses as they managed financial uncertainty and shifts in 2023. When conflict threatened global markets and supply chains, Lloyd’s mobilised solutions and capital to help communities respond, from insuring the transportation of grain from Ukraine’s ports to providing a new risk solution for the International Federation of Red Cross and Red Crescent Societies (IFRC), enabling them to access finance quickly in the event of a humanitarian crisis.

We continued to step up to our commitment to be the insurer of the transition, publishing a three-year roadmap for our market’s pathway as the world progresses to net zero. Alignment on objectives and defining what ‘good’ looks like is the precursor to action: we were pleased to provide that direction for our market as we navigate this unprecedented shift in how we live, spend and invest. At the same time, we worked to build climate resilience through the cross-sector Sustainable Markets Initiative, including launching a new partnership with the United Nations Capital Development Fund (UNCDF) to build disaster resilience in climate-vulnerable countries.

Leadership also meant maintaining our focus on creating an inclusive and high performance culture in our market. Again, measurement is the key: and in 2023 we were pleased to see increases in both hiring from ethnically diverse backgrounds (against our ‘one in three’ ambition), and women in leadership positions (meaning we have now met the 35% target set out in 2020). That progress allows us to adjust our sights to see how we can continue supporting this progress over the long term. We also continued to support diversity in all its forms through our market networks and oversight, including adding culture as a ‘gateway’ principle market firms must meet to achieve a higher rating.

As with climate, defining and tracking ‘good’ behaviours – while taking action on ‘bad' behaviours – will be key to our progress on culture in the coming years. It's anything but ‘job done’, and 2024 will see us focus on accelerating these efforts – including through the market-wide programme of initiatives known as Inclusive Futures, launched in 2023 to help Black and ethnically diverse individuals progress from the classroom to the boardroom.

This progress across our strategic priorities enables us to show we are addressing the expectations set by our stakeholders in 2018. That includes delivering sustainable performance and growth; providing attractive opportunities to work, invest and place risk in the Lloyd’s market; tackling cost through our digitalisation plans and underwriting discipline; and continuing to collaborate and innovate to help society build resilience against the threats we face.

We stand at an important point in the insurance cycle where the nature of risk – and the value of insurance – is demonstrated by the industry growing at a much faster rate than GDP. Our performance – which remains our number one priority – means we have earned the right to continue growing profitably and sustainably. This will enable us to meet more of the world’s risk needs as we innovate for customers and provide opportunities for capital to get behind growth in the years ahead.

2024 is therefore shaping up to be another solid year of profitable growth, capital resilience and an improved framework in which our market can operate, from our culture and climate plans to our digitalisation through Blueprint Two. We go into the year with renewed confidence in our ability to deliver for customers in an uncertain environment, and fresh energy to work with all our stakeholders to help create a braver world.

John Neal

Chief Executive Officer