Chief Financial Officer's statement

In my final report as Lloyd's Chief Financial Officer, I am delighted to present another year of robust financial performance, showing that our market’s focus on underwriting discipline and profitability over the last seven years is starting to deliver results. 

2024 saw the continuation of positive returns, with profit before tax of £9.6bn (2023: £10.7bn), consisting of an underwriting result of £5.3bn (2023: £5.9bn) and an investment return of £4.9bn (2023: £5.3bn). 

Our gross written premium reached £55.5bn, an increase of 6.5% compared to 2023. On the back of 7.2% of price increases in 2023 and 0.3% price increases in 2024, volume has been the primary driver of growth at 8.5% (7.6% from existing and 0.9% from new syndicates), offset by (2.3)% of foreign exchange movements. The Reinsurance and Property segments, which continued to experience positive price changes in 2024, reported the highest growth rates as the market expanded in its most profitable areas.

The underlying combined ratio of 79.1% (2023: 80.5%) reflects the market's ongoing focus on consistent profitability. 

Our combined ratio of 86.9% is up from 84.0% in 2023 as 2024 major claims, including Hurricane Milton, Hurricane Helene, and the Dali Baltimore Bridge collision, contributed to an increase in the major claims ratio to 7.8% (2023: 3.5%). 

Prior year releases positively impacted the combined ratio by 2.4% (2023: 2.2%), with favourable developments across most lines of business. The expense ratio remained stable at 34.4% (2023: 34.4%). 

Return on capital of 21.0% in 2024 brings the seven year average to 7.6% (2023: 3.6%), demonstrating positive momentum - but we must remain vigilant.

Our investment performance in 2024 delivered a return of £4.9bn (2023: £5.3bn) with the portfolio benefiting from another year of higher interest rates. Investment income increased to £4.2bn (2023: £3.9bn), with lower paper profits driving the reduction in investment return compared to the previous year, with fourth quarter volatility resulting in mark-to-market losses on fixed income investments.

The central solvency ratio remains strong at 435%, with the reduction from 503% in 2023 reflecting the increase in the Central SCR (a 73pp reduction) and our capital management actions to reduce Tier 1 and 2 debt (a 27pp reduction), offset by an increase in Society net assets due to profitable growth (a 32pp increase). The market-wide solvency ratio remained robust at 205% (2023: 207%).

The renewal of the Central Fund cover this year further supports Lloyd’s long-term market growth and enhances our financial strength, providing assurance to capital providers and customers alike. 

The total capital of the market balance sheet stands at £47.1bn (2023: £45.3bn). Our balance sheet includes an overall reserve margin of £5.4bn (2023: £4.6bn), which has been increasing steadily year on year. This is in line with our reserving philosophy of booking losses early and conservatively. Overall, this year the market has benefited from favourable prior year experience, including on Cyber and FinPro Casualty lines, whilst specifically increasing reserve strength in Reinsurance Casualty lines of business where there continues to be increased uncertainty in relation to claims inflation, and in Aviation driven by losses related to the Ukraine conflict. 

Our robust financial position and strong operating performance saw rating agency A.M. Best upgrade the market's financial strength rating to 'A+', following the upgrade from S&P Global at the end of 2023. As a result, all four of our ratings agencies now grade the Lloyd’s market at AA- or equivalent, the highest ratings we have ever achieved.

These results reflect our commitment to sustainable performance and strategic growth, positioning Lloyd's strongly as we look to future opportunities. 

As I prepare to hand over my responsibilities to Alexandra Cliff in May 2025, I am confident our robust capital framework and market modernisation activities position Lloyd's strongly for the next phase of growth. While market conditions require continued focus, our disciplined underwriting approach enables us to capitalise on opportunities that strengthen Lloyd's position in the global insurance market. 

I would like to express my gratitude to the Lloyd's community for their support during my tenure, and I look forward to continuing to contribute to Lloyd's success in an advisory role.

Burkhard Keese

Chief Financial Officer, Lloyd’s