Lloyd’s Anticipates Significant Loss from California Wildfires
The renowned Lloyd’s insurance and reinsurance marketplace has projected a net loss of approximately $2.3 billion due to the devastating wildfires in Los Angeles, California. This announcement comes as Lloyd’s also reports another robust year of underwriting profit and top-line growth.
Lloyd’s is set to unveil its full year 2024 results on March 20th. However, today they have shared preliminary figures along with their January 2025 estimate regarding the California wildfire loss.
In a statement, Lloyd’s noted, “While not incorporated in the FY24 outcome, based on currently available data, we estimate the net loss to the market from the Californian wildfires to be around $2.3 billion.”
Offering condolences, Burkhard Keese, Lloyd’s Chief Financial Officer, remarked, “We express our deepest sympathies to those impacted by the California fires earlier this year. While we are still evaluating the full repercussions, we do not anticipate it being a capital event.”
The industry loss estimates for these wildfires are coalescing around the $40 billion mark, with some suggesting figures closer to $50 billion. Regardless, it stands as the most costly wildfire incident in U.S. history and ranks among the most expensive natural catastrophe loss events for insurers and reinsurers globally.
Preliminary Financial Highlights
According to the preliminary results shared by Lloyd’s, the underwriting profit is projected to reach £5.3 billion for 2024, a substantial figure albeit lower than 2023’s £5.9 billion. Meanwhile, profit before tax is anticipated to dip from £10.7 billion to £9.6 billion in 2024.
Lloyd’s disclosed that gross written premiums (GWP) rose by 6.5% year-over-year to £55.5 billion in 2024. This reflects an 8.5% growth, predominantly in the property and reinsurance segments, which Lloyd’s claims exhibited a robust underwriting performance, with a 0.3% price change and FX movements of -2.3%.
The Lloyd’s market combined ratio increased by 2.9 percentage points, remaining healthy at 86.9% in 2024, driven by significant claims in the latter half of the year. Excluding major loss events, the underlying combined ratio improved to 79.1% in 2024 from 80.5% in 2023.
The attritional loss ratio also showed improvement, reaching 47.1% in 2024 from 48.3% the previous year, reflecting continued underwriting discipline. The expense ratio remained stable at 34.4% for the year.
On the assets side, Lloyd’s reported a full year 2024 investment return of £4.9 billion, down from 2023’s £5.3 billion. The market highlighted that the portfolio benefited from another year of high interest rates.
Keese concluded, “In 2024, we maintained our focus on strong profitability and disciplined growth. Our market has delivered another excellent underwriting year for our investors, while offering best-in-class solutions for our clients to safeguard their business flows and balance sheets.”
