Lloyd’s market remains a compelling opportunity for investors: LMA / ICMR

Lloyd’s of London continued to demonstrate its attractiveness to investors throughout 2025, with individual syndicates delivering strong results, while the market has also seen an increasing number of new entrants and a growth in risk capital deployed through the market’s insurance-linked securities (ILS) structure London Bridge 2 PCC.

The Lloyd’s Market Association (LMA) and Insurance Capital Markets Research (ICMR) recently published its Lloyd’s 2026 Insights Report, which provides a detailed analysis of Lloyd’s and syndicates’ 2025 year-end results.

“In 2025, Lloyd’s continued to demonstrate its attractiveness relative to other investment options, delivering strong returns, comparable levels of volatility and low correlation to mainstream asset classes, while outperforming benchmarks such as catastrophe bond indices and providing diversification benefits not readily available elsewhere in global capital markets,” LMA and ICMR said.

At the same time, the report also indicated that, with individual syndicates delivering strong results throughout 2025, “Lloyd’s remains well positioned as a compelling proposition to investors.”

As previously noted, the Lloyd’s market has also seen an increasing number of new entrants and a growth in risk capital deployed through the market’s ILS structure London Bridge 2 PCC.

As we previously reported, the risk transformation vehicle opened 14 cells in Q4 2025, with around $660 million of new capital brought into the Lloyd’s market.

London Bridge 2 PCC is seeing increasing traction as a mechanism to deploy capital into the Lloyd’s marketplace, being well-suited to third-party investors looking to fund Lloyd’s structures and as a mechanism they can access reinsurance-linked returns through.

It’s also important to remember that as an ILS structure, London Bridge 2 PCC is an efficient way for re/insurers to deploy capital into the market, a modern way to fund obligations there, accessing diversifying business from Lloyd’s and bypassing more traditional routes that have been used in the past.

Earlier this year, Chris Lay, Chair of the London Market Group (LMG) trade body outlined how the London insurance and reinsurance market needs to build on the success seen with the Lloyd’s insurance-linked securities structure London Bridge 2 PCC, with ILS remaining a real opportunity to support market growth despite the UK ILS regime having stalled.

According to the LMA and ICMR’s report, managing agents delivered a full‑year result in 2025 of profit before tax of £10.6 billion and a combined ratio of 87.6%, while underwriting and investment returns have helped to further bolster the market’s balance sheet, with total capital reaching £49.8 billion.

Both firms also acknowledged that while there are signs of price softening being seen within some classes, the 2025 results confirms that Lloyd’s enters this next phase of the cycle with strong capitalisation.

However, the LMA’s view is that in order for the Lloyd’s market to successfully navigate the next phase of the cycle, three things are necessary: maintaining disciplined underwriting, new entrants which are additive to the market and reduced friction in capital deployment.

Quentin Moore, co-founder of ICMR, commented: “If Lloyd’s is to remain the pre-eminent global market for specialty risk, investors must find more efficient ways for capital to scale in and out.

“Whether through ‘renting’ capacity from existing members as a cycle management tool or using liquid proxies for day-one deployment, the industry needs to bridge the gap between the needs of insurance underwriting and modern capital markets reality.”

Paul Davenport, Finance & Risk Director at the LMA, said: “2025 was another strong year for the Lloyd’s market. In the past year, Lloyd’s has upheld its position as an attractive option for investors, buoyed by disciplined underwriting and a focus on rate adequacy across the market. 2025 is the third consecutive year with average returns on capital exceeding 20%.”

Markus Gesmann, Co-Founder of ICMR, added: “Ultimately, Lloyd’s remains one of the financial industry’s ‘hidden secrets’ and a vital contributor to the UK economy. By providing this level of data-driven transparency through our publications and indices, ICMR aims to demystify the market and make Lloyd’s performance more accessible to the global investment community.”