Lloyd's of London has reported a strong set of full-year results for 2025, alongside the launch of a new five-year strategy aimed at sharpening underwriting performance, improving efficiency and making greater use of its capital strength.

Pre-tax profit rose 10.1% to £10.6 billion, supported by underwriting and investment returns, while gross written premium increased 4.2% to £57.9bn. The combined ratio deteriorated slightly to 87.6% (2024: 86.9%) but remained firmly within profitable territory.

Strong capital position underpins strategy shift

The market’s balance sheet strengthened further over the year, with total capital, reserves and subordinated debt rising 5.7% to £49.8bn. The central solvency ratio increased significantly to 496% (2024: 435%), while the market-wide solvency ratio edged down slightly to 200% (2024: 205%), both remaining comfortably above regulatory requirements.

Chief executive Patrick Tiernan said the results provide “a firm foundation for the challenges and risks ahead,” particularly as the market faces increasing volatility and more competitive pricing conditions.

He added that the new strategy represents “a disciplined, market-led and necessary sharpening of our financial edge,” with a focus on underwriting performance, efficiency and maximising Lloyd’s “unique capital advantage.”

Premium growth slows as pricing softens

Premium growth was driven by 10.3% volume increases, reflecting new entrants and expansion by existing syndicates, but this was offset by a 3.7% reduction in pricing and a 2.4% foreign exchange headwind as sterling strengthened against the US dollar.

This points to a more competitive rating environment, particularly in areas where pricing has begun to soften following the peak of the hard market.

Underwriting performance remains resilient

Underwriting profit was broadly stable at £5.2bn (2024: £5.3bn), with the combined ratio of 87.6% supported by a lower major claims ratio of 5.8% (2024: 7.8%), reflecting comparatively benign catastrophe experience in the latter part of the year.

The underlying combined ratio increased to 81.8% (2024: 79.1%), while prior year reserve releases contributed 1.7 percentage points to the overall result. The attritional loss ratio remained stable at 47.9%, although the expense ratio rose to 35.6% due to higher commissions, business mix and foreign exchange impacts.

Investment returns boost overall profitability

Investment returns increased to £6.0bn (2024: £4.9bn), benefiting from fixed income income and realised gains, as well as positive equity market performance. Falling interest rates also contributed to mark-to-market gains.

Lloyd’s said its investment portfolio remains focused on capital preservation, liquidity and liability matching, helping to maintain resilience amid geopolitical uncertainty and interest rate volatility.

Market bodies back strategic direction

Industry bodies broadly welcomed the new strategy, particularly its focus on underwriting discipline, capital efficiency and talent development.

Sheila Cameron, chief executive of the Lloyd's Market Association, said the strategy “indicated a clear and coherent direction of travel” and would help managing agents deliver “better and more efficient outcomes” for policyholders.

She highlighted the importance of maintaining a sub-95% combined operating ratio through the cycle and welcomed the focus on capital efficiency and alignment between oversight and risk. Cameron also pointed to planned back-office modernisation and increased investment in early careers talent as positive steps for the market.

Meanwhile, Caroline Wagstaff, chief executive of the London Market Group, said the strategy sets out “a clear road map” for the market’s future.

She particularly welcomed the commitment to double early careers intake, noting that building a pipeline of skilled talent is “not a nice to have but a competitive necessity,” echoing concerns raised in the London Market Group’s recent work on workforce demographics.

Outlook: discipline remains key as conditions evolve

Looking ahead, Lloyd’s expects pricing conditions to become more challenging and volatility to increase, but said its strategic priorities remain unchanged.

The market will continue to focus on areas where rate adequacy is strongest, while leveraging its capital strength and global platform to navigate a shifting risk environment.