Lloyd’s of London is poised for another impressive year, with Insurance Capital Markets Research (ICMR) forecasting a combined ratio well below 90%, despite significant catastrophe losses in 2024.
This outlook is based on results from 21 of the 27 listed companies that own Lloyd’s businesses, which make up the RISX equity index.
ICMR expects Lloyd’s to outperform the aggregate performance of its parent companies, reinforcing the value proposition of the Lloyd’s platform.
Lloyd’s reported a combined ratio of 83.7% for the first half of 2024. While some deterioration is expected in the second half, Lloyd’s is still projected to report a combined ratio comfortably below 90%, in line with nine of the 22 RISX constituents that have released their 2024 results so far.
The RISX equity index serves as both a benchmark for investing in Lloyd’s and an indicator of its pro-forma annual accounting performance, providing pundits and observers with a head start on the likely Lloyd’s numbers yet to be released.
Moreover, the RISX equity index reveals that equity investors in the sector had a very successful year. Investing in shares of Lloyd’s parent companies, proportional to their Lloyd’s involvement, would have resulted in a total net return of 31.8% for the calendar year.
ICMR also noted that the ongoing trend of improved underwriting performance in recent years, along with strong returns on capital, should continue to attract investor interest in deploying capital in the sector, particularly at Lloyd’s.
