Patrick Tiernan, CEO: London Market Conference speech

Performance and sentiment

Let’s start with where we are today.

We shared Lloyd’s half-year numbers two months ago.

We don’t give third quarter guidance, but with a benign cat season to date – notwithstanding the devastation wreaked by hurricane Melissa in Jamaica – the outlook remains good for 2025, absent major losses.

We remain confident in our strong balance sheet and long-tail reserving discipline.

While the rate moderation trend continues to pick up pace, its impact at portfolio level is less severe than headlines suggest. There are enough pockets of rate adequacy to reward underwriting discipline, smart cycle management and portfolio rebalancing next year. 

Our first look at the 2026 plans gives us some confidence that the best firms at Lloyd’s are boxing clever. 

You’ll hear the detail in Rachel’s fourth quarter market message in a couple of weeks. 

But she has allowed me to share with you that like-for-like premium growth is running at below 5 per cent on rate expectations that are lower than 2025. 

Net new business is being driven by structured solutions, new entrants underwriting new lines, new reinsurance captives and brokers facilitating cross-class business with lead underwriters.

So far, this is incremental growth, not volume chasing.

Syndicates are strengthening their volatility assumptions, recognising that profit at the mean has narrowed. Capital against exposure has ticked upward – a sensible response to squeezed margins and heightened uncertainty.

In essence, the market is still in good shape. 

That said, the Lloyd’s market heads into 2026 with a very different complexion from previous years. 

Positive sentiment and abundant capital can no longer rely on rate alone to sate demand. 

Underwriting leadership must be differentiated to demonstrate value and attract new business in the open market. 

In prior cycles, the best adapted while the wider market drifted into soft conditions and paid the price for passivity. 

But every cycle is different. Therefore, it is important to understand the trends shaping the market. 

Do so and we can avoid the false dichotomy of choosing between returns and relevance to clients; we can achieve both.

Market trends

Last year I said three themes would dominate the market in 2025 – a battle for distribution, carrier M&A and capital innovation.

For 2026, I’ll keep two, expand one, and add a fourth.

Then we’ll look at what this all means for Lloyd’s and the London Market.

The first keeper is distribution. 

Cross-class facilities and structured solutions are proliferating as margin expansion gets harder and data gets better. They currently represent three per cent of the Lloyd’s portfolio and growing at a compound annual growth rate of 56 per cent.

Broad facilities are no longer fringe experiments. They’re becoming a structural feature of the Lloyd’s market – attractive to those placing homogenous business into London. 

We expect that trend to continue. 

In the past, Lloyd’s lost relevance when business became commoditised and efficiency became paramount. This time round, we are determined to remain competitive to brokers and carriers – through sharper efficiency, calibrated governance and relentless cost discipline.

However, underwriting performance must remain our priority. 

We will be active in managing these Lloyd’s-only structures. They are the preserve of underwriters capable of leading the facility, 

• they must achieve target indexation of the broker’s book, 
• they must avoid anti-selection and excessive commissions,
• they must produce a client dividend, and meet our costs profitability hurdle.

The availability of sufficient performance data is a perquisite for brokers establishing facilities in Lloyd’s. We won’t compromise that requirement. But in the case of disrupted business or shifting portfolio placements, underwriters can step up and use consortia.

If you haven’t yet benefitted from the power of consortia, I suggest you ask us about how to tap into one of the key tools Lloyd’s offers. It is hugely valuable to underwriters in providing scaled, syndicated solutions to brokers.

The sting in the tail is that this trend is likely to squeeze out follow-only capacity that offers no efficiency or underwriting advantage. 

But with all the talk of follow, my fear is we lose open market leadership capability. Therefore, we see the positive case for increased innovation as a risk mitigant. 

The second keeper is carrier driven M&A. 

The deal flurry in 2025 has been no surprise. 

It reflects the strength of founder-built businesses, strong underwriting results and improved investor sentiment towards London.

It’s also a logical consequence of excess capital and a desire to bolt on premium growth at adequate rates.

Consolidation feels overdue – especially when you compare balance sheet M&A to that of our distribution-focused brethren – and it will aid discipline in a softening market.

I don’t believe we have reached the high-water mark yet. M&A will remain a defining feature in 2026.

The third theme I want to keep but expand is innovation. 

Last year I meant balance-sheet creativity – notably reinsurance captive deals

In 2026 we must go further. Hold that thought – I will return to it in a bit. 

The fourth and new trend to add is, unsurprisingly, downward margin pressure. 

In 2026 this this could be seminal for sustainable profitability. 

Large account property and several specialty lines – marine and cyber – are weighing on the wider portfolio.

Despite rate rises in casualty, political risk and other pockets, the overall Lloyd’s book is expected to soften by mid-single digits next year.

Falling rates don’t necessarily have a linear relationship with combined ratios, so long as disciplined portfolio management and better risk selection is deployed.

But costs are ticking up due to investment in expansion and new technology, and acquisition costs due to profit commissions.

We must bring these costs under control quickly. If we don’t, London will lose business to leaner markets. 

External trends and opportunities

What should we keep in mind as we think about how we respond to the external environment?

I won’t use up too much oxygen on describing the current geo-strategic landscape as I know there’s more to come from others later today. 

Lloyd’s has analysed over 60 external trends across politics, economics, society, technology and law – rendering them down to the four we believe matter most. 

They are;

• Heightened global fragmentation from political tension, isolationism, fiscal weakness, slowing major economies, and growth being lead from Asia.
• Credit default cascades that could set off a chain reaction among financial institutions and destabilise global markets
• A widening protection gap between economic and insured losses – driven by volatility, loss severity, climate change, cybercrime, litigation risk, affordability, mega-firm concentration and AI-driven GDP growth.
• Disruption to traditional placement models due to digital efficiency gains, bilateral settlement, and ubiquitous data leading to the increased commoditisation of risks.

The world is always being shaped by emerging forces. The difference this time is the pace and scale of change – along with the emergence of new mega-risks. 

• If we look at the pace of development of AI. Global  investment is projected to reach $1.5 trillion over the next three years. The pace of scaling of the cyber market from 1999 looks anaemic in comparison. 
• Look at the scale ambitions of new investment in energy, defence and infrastructure to boost growth and bolster security – realigning national budgets for the long term. 

Now because we start from a position of strength, we may believe we have the choice to act or to stand by and watch. There is not an obvious burning platform. 

Unless, that is, the burning platform is the risk and long-term cost of standing by. 

Many of us left Monte Carlo and other conferences  wondering where industry growth will come from.

The activity is easy to predict. 

But what role can the London Market play when it comes to…

• Building the data centres that will power the AI revolution
• Providing the new and reliable sources of energy to power progress to a more sustainable and safer world 
• Expanding defence and security in response to a more unstable world
• Investing in the physical and digital infrastructure needed to jump-start productivity growth
• Strengthening resilience to cope with climate change risk and more volatile weather
• And increasing insurance penetration – because all the data shows us that doing so will turbocharge economic growth. 

As the boundaries between physical, digital and geopolitical threats dissolve, this is where the insurance industry must lead. 

We can turn uncertainty into investable opportunity – unlocking capital, de-risking progress and giving governments and companies the confidence to move faster.

Is this what it feels like to be on the cusp of rapid evolution – exciting and daunting at once? 

The coming years will be defined by our ability to strike the balance between earning investor trust through a disciplined core book, while demonstrating the boldness needed to tackle new and complex risks that no-one else can.

That balance is already shaping our emerging strategy at Lloyd’s, which I’ve shared with the Lloyd’s Council and will publish next March. 

But one element can’t wait – because the challenge won’t. And that element is the need to innovate – at scale. 

Total innovation

We’re entering a new market phase – one that demands we perform and innovate at the same time.

I’ve said it before and will say it again: Lloyd’s is a market of firsts.

We’ve consistently turned emerging threats into insurable realities. Be it motor insurance, aviation insurance, space insurance, cyber insurance or who knows what next. 

Lloyd’s excels in nascent technologies and risks where there is a lack of precedent or data. It’s the role we’re already leaning into, for example, with renewable energy and storage. 

The risks have changed over the years. But the principle – helping people move forward boldly and with confidence – has not.

Lloyd’s and the London market have unique attributes that make us natural innovation partners:

• The world’s best risk takers with a wealth of expertise
• The ability to build scale quickly through consortia and other lead underwriting arrangements
• The capacity to syndicate efficiently to avoid concentration risk
• A capital model that shoulders more risk per dollar than any other financial institution
• 335 years of trust created by paying out when it matters
• Structuring flexibility to build solutions across members, third-party capital, ILS, captives and efficient reinsurance to home balance sheets
• Over 200 local licences to deliver global solutions
• London Bridge 2 that allows capital to flow into London without double taxation

But, to rise to the scale of the challenges ahead, none of these attributes alone will be enough. 

If these advantages remain isolated, we’ll only ever achieve piecemeal progress.

We have enjoyed sporadic successes recently in product innovation, parametric solutions, cat bond issuance, return boosting, post loss responses, among others. 

But we need to have a greater common understanding and ability to engage all of these features.  

Innovation must become the natural operating rhythm within the market, and it needs to be synchronised.

I have a pet name for the approach I believe we need to adopt – total innovation.

Think of the total football played by the great Dutch teams of the 1970s, where every player understood every position, and the team moved as one fluid organism. 

Or of Sir Norman Foster’s philosophy of total architecture, in which every element supports and strengthens the whole structure

What might this mean in practice in our world of Insurance? Well, for Lloyd’s it means we need to act now and we need to act differently. 

We need to invite our market to challenge us to be a great innovation partner

• When it comes to speed to access, challenge our bias towards action
• When it comes to scale, challenge whether the line sizes you can lead with are in keeping with your capability and financial strength
• When it comes to concentration risk, challenge the structures available to syndicate, use 3rd party capital, outwards reinsurance, and other innovative structures
• When it comes to policy, challenge whether we are consistent and competitive in policy making across areas such as infrastructure, energy and defence to avoid drifting with trends and thus losing credibility with investors.

How we respond will determine whether we lead the next development of global risk – or whether we will be condemned to play perpetual catch-up. 

We must bury any Luddite tendencies and embrace the technological advances of our time. 

We will falter if we are frozen by fear. We will progress through boldness and innovation. 

Total innovation can make us a beacon for risk takers, for capital and for the future.

Closing

So, what are the main things I want you to leave here thinking about? 

• The market is in good shape but conditions are more challenging
• The key trends I am watching for 2026 are: the continued battle for distribution, continued carrier M&A, accelerating rate moderation and the need for a different approach to innovation 
• The external environment is high risk, high reward
•  In this cycle, it may be safer to be bolder
• We’re entering a new market phase – one that demands we perform and innovate at the same time.

Before I sign off, I’d like to leave you with one ask: if your ambitions match or exceed ours, please come and challenge us with them.

Lloyd’s and London have always thrived when united by purpose – when we’ve looked outward, thought long-term and acted boldly.

When, like me, you’re the new kid on the block, it pays to know your history – what worked, what failed and why.

Lloyd’s is a marketplace that has endured because it harnesses the wisdom of crowds. 

Lloyd’s motto is Fidentia. It means trust. But also boldness rooted in confidence. 

The Lloyd’s Act requires us not just to protect the market but to advance it. 

To those ends, we are committed to delivering sustainable returns, to managing market risk and to serving your needs

We are committed to bringing together the world’s risk takers to catalyse progress. 

And we are committed to remain the leading underwriting market in the world – by embracing total innovation.

Thank you.