Last week, Lloyd’s of London posted its full-year financial results for 2023, reporting a third consecutive year of double-digit premium growth, with GWP increasing almost 12% to £52.1 billion. Summarising the results in a media briefing, Lloyd’s CEO John Neal (pictured) said the marketplace was demonstrating “sustainable performance, supported by the execution of our key strategic priorities”.
Lloyd’s remains fully focused on supporting market leading profitability in its primary fields of corporate and specialty insurance, he said, and its performance must be backed up by a clear strategic plan that is well-executed. He noted that the organisation has shown strong market performance and continued progress in its digitalisation strategy while displaying purpose-driven leadership and progressing with its plans to build a more inclusive and diverse marketplace.
“The combination of that sustainable performance and strategic executive means we’re currently overseeing a market that is profitable, growing and delivering sustainable value for all our stakeholders,” he said. “And we’re well positioned to do so in the years ahead.”
Sharing how its outlook and priorities are shaping up for 2024, Neal said sustainable performance and strategic execution remain the name of the game. 2024 is about ensuring that Lloyd’s remains a reliable, profitable partner for its capital providers, customers and communities. That includes continuing to enact the sustainability framework it introduced a few years ago to focus its efforts on the objectives and metrics that ensure it can remain a growing and thriving market.
“This framework is our North Star, and the basis of our conversations with regulators, rating agencies, and indeed the market,” he said. “Meanwhile, digitalisation will help us support a data-led and ‘right first time’ market that is able to deliver both cost efficiencies and resilience for the stakeholders operating within and interacting with our market.
“So, our focus for 2024 will be supporting market participants with the adoption of Blueprint Two phase one digital services… We're now targeting October 2024 and we'll share our milestone plan that sets out how we're going to get there with the market soon. The cutover will see us move from the 30-plus year old mainframe system to a cloud based, resilient platform.
“We'll then look ahead to delivering phase two through 2025, which will enable full digital placement of risk for market participants and the creation and use of the core data record, a first in global and specialty insurance and reinsurance – which unlocks both efficiency and cost benefits and ensures our marketplace is fit for the 21st century, and indeed beyond.”
These efforts will be supported by Lloyd’s commercial strategy to develop leading products and services for its stakeholders, he said, whether by enhancing its multinational proposition, or making sure every commercial and specialty insurer is offered the opportunity to be represented at Lloyd’s. During the briefing, Neal also touched on how Aviva and Fidelis recently affirmed their confidence in the Lloyd’s market – Aviva through the acquisition of Probitas, and Fidelis with its launch of Syndicate 3123.
“I think the journey that we've been on at Lloyds, which has been to demonstrate that the market can be leading in terms of performance, that we can digitise and, therefore, attack the cost of doing business, and can have a voice that's valued – whether that's on the debate on climate or the debate on diversity, equity and inclusion – I think that puts us in the space where, in my view, every insurer or reinsurer that’s got a position on corporate and specialty insurance should want to be able to participate in the Lloyd’s marketplace, not necessarily exclusively, but should want to position,” he said.
“I think that's what we're beginning to see, and Aviva and Fidelis are endorsing that thinking. So, I don't see why there shouldn't be others that follow in the same vein.”
The outward facing work that Lloyd’s will be doing in 2024 will be accompanied by an internal focus on remaining a fit-for-purpose corporation, he said, which means ensuring that its platforms, processes and oversight enable a thriving market rather than getting in its way.
Innovation and collaboration will remain the bread and butter of the market in the year ahead. Whether through the Lloyd’s Lab, Lloyd’s Futureset or its sustainable market initiatives, the ambition is to provide solutions for the problems the world is really facing and to put Lloyd’s in the rooms and forums where pivotal conversations are being held.
“Underpinning that will be an effort to tell the Lloyd’s story better,” he said. “No-one disagrees that our market has enduring value and relevance in the current climate; ask any insurer or broker and they'll say the same. What we need to do is synthesise that story more effectively for investors, policymakers, potential employees and others to make sure they are as familiar with those benefits – access to global markets, access to talent, access to innovation – as we all are in this room.”
Neal noted that an effective combination of these objectives is what will help the market sustain the performance recorded in 2023, while enabling it to continue to provide leadership and partnership for customers, capital and market participants in the current environment. The outlook for 2024 is positive, he said, and it’s important that the market maintains discipline, not just throughout 2024 but going into 2025.
In terms of outlook and based on current conditions, he said, Lloyd’s anticipates its GWP to reach £57 million - plus or minus 5% - and it continues to support profitable growth across the market. In addition, the organisation will seek to help the market continue to deliver sustainable profits in accordance with its business plans through its outperformance framework.
“We believe the market can expect to achieve strong profitability again in 2024 with a forecast combined ratio of 90% to 95%, which assumes our normal allowance of around 10-11% for large risk and natural catastrophe loss,” he said. “This in turn is expected to support strong performance in realised gain on all assets of around 4%.
“So it has been an impressive year. We're encouraged by the performance the market has been able to demonstrate and sustain, alongside the progress we've seen against our strategic objectives. And we're looking forward to working with those in this room and beyond to continue that progress in the coming year in 2024 - and dare I say it, for the years ahead.”
