California Wildfires Impact Lloyd’s Market
The specialist Lloyd’s insurance and reinsurance marketplace has disclosed an estimated net loss of approximately $2.3 billion due to the devastating wildfires in Los Angeles, California. This announcement comes as the market continues to demonstrate robust underwriting profits and top-line growth.
Lloyd’s plans to release its full year 2024 financial results on March 20, 2025, and has shared some preliminary data along with the wildfire loss estimate. The CFO of Lloyd’s, Burkhard Keese, expressed sympathy for those affected by the fires: “We extend our deepest sympathies to those impacted by the California fires earlier this year. While we are still assessing the full impact, we do not anticipate this to be a capital event.”
Current industry estimates for the wildfire losses are converging around $40 billion, although some experts suggest the total may reach closer to $50 billion. This makes it the costliest wildfire event in U.S. history and one of the most significant natural catastrophe loss events for insurers globally.
Lloyd’s Preliminary 2024 Financial Results
In its preliminary results, Lloyd’s expects an underwriting profit of £5.3 billion for 2024, which, although robust, is slightly down from 2023’s £5.9 billion. Profit before tax is projected to decrease from £10.7 billion to £9.6 billion in 2024.
Lloyd’s reported a 6.5% increase in gross written premiums (GWP) year-on-year, reaching £55.5 billion in 2024. This growth is primarily from the property and reinsurance segments, which showed strong underwriting performance. There was a 0.3% price change alongside foreign exchange movements of -2.3%.
The market’s combined ratio rose by 2.9 percentage points to a still favorable 86.9% in 2024, largely due to significant claims in the latter half of the year. Excluding large loss events, the underlying combined ratio improved to 79.1% from 80.5% in 2023. The attritional loss ratio also showed improvement, reducing to 47.1% from 48.3%, indicating continued underwriting discipline. The expense ratio remained steady at 34.4%.
On the asset side, Lloyd’s reported a full year 2024 investment return of £4.9 billion, a decrease from 2023’s £5.3 billion, with benefits from high interest rates.
Keese summarized the year by stating, “2024 saw us maintain our focus on strong profitability and disciplined growth. Our market has delivered another excellent underwriting year for our investors, while providing best-in-class solutions for our customers to protect their business flows and balance sheets.”
