Lloyd's fourth quarter market messages

Lloyd’s held  the last of this year’s market message meetings on the evening of 30 November. These meetings are an opportunity for Lloyd’s centrally to communicate its concerns and priorities to market practitioners.

This quarter’s meeting was upbeat, coming at the end of the business planning season which saw an increase in planned premium income of 11%, taking expected premium volumes for 2024 to £60 billion. The increase in income is evenly distributed across rate increase and exposure growth, and with the majority allocated to syndicates considered to be the best performers. Patrick Tiernan, Lloyd’s Chief of Markets, said that he was not anticipating any change to the central dynamics of the market, but there would be additional scrutiny on casualty markets, particularly directors and officers, cyber and political violence and terrorism classes in 2024.

Mr Tiernan has been vocal in criticism of the directors and officers market at earlier meetings, although he said that there will be a reduction in the class’s premium volume in 2024. This was welcome, especially as it has been driven by syndicate managers rather than enforced by the performance management team. His view is that the Lloyd’s syndicates are acting responsibly, focusing on risk selection and portfolio management. Should the D&O market continue to deteriorate, his team would look favourably on plans resubmitted to reduce income in the area and to reallocate to other classes.

Peter Montanaro, Lloyd’s Market oversight director, spoke about the successful implementation of project RIO (Lloyd’s speak for “reimagining oversight”), which now embedded will be simply referred to as principles based oversight (PBO). The continuing delivery of Blueprint Two will be designed to support improvements in the way syndicates access smaller business through underwriting authorities delegated to coverholders worldwide.

Interim Chief Actuary, Mirjam Spies, spoke about changes in the capital requirements. After a substantial increase in capital for 2023, and despite the increase in premium volumes planned for 2024, there is a more modest increase in capital for members underwriting in 2024. An increased capital requirement arising out of the additional exposure is offset by the strengthening of the pound, changing risk profile, improving underwriting profitability and an increase in the expected investment income.

Summing up, Tiernan said that he was bullish on the market opportunity. He will steadfastly promote and protect the market through this exciting period.

A video recording of the meeting is available here.