The best market conditions for at least a generation with a forecast return in excess of 20% of capital in 2024.
The primary driver of insurance and reinsurance pricing is the supply of capital.
The higher than usual number of catastrophes in 2017 and 2018 and the impact of Covid-19 in 2019 and 2020, resulted in a lack of capital. That lack of supply coupled with strong demand resulted in prices rising across nearly all types of insurance.
With prices rising again in 2023 following Hurricane Ian in 2022 this is a particularly attractive time to provide capital to insurers. These are probably the best underwriting conditions for a generation.
While market conditions are attractive, high quality syndicates operating in Lloyd’s are able to grow their business which provides improved opportunities to build a portfolio of top class syndicates.
Syndicates invest their premiums and reserves in high quality bond portfolios which are generating attractive returns in the current environment. For investors at Lloyd’s, these investment returns are in addition to the returns generated by the underwriting.
Much better data and much more sophisticated technology, means that it is significantly easier to forecast potential outcomes and avoid exposing investors to a high level of insurance claims. In addition the management team at Lloyd’s continues to make the long-term profitability of the market its core priority which has improved underwriting standards across the market.