Lloyd’s expects Helene & Milton loss to trend towards lower-end of $1.8bn to $3.4bn range
The Lloyd’s insurance and reinsurance market is expecting losses from hurricanes Helene and Milton to fall within a $1.8 billion to $3.4 billion range, but speaking today Patrick Tiernan, Chief of Markets, said he expects it will trend towards the lower end.
Giving his market message for the fourth-quarter, Tiernan explained that underwriting conditions are favourable, but increasingly competitive.
Tiernan said, “As I look at the jump off point for 2025, I see a global specialty market that continues to experience favourable, if not more competitive conditions.
“The risk environment remains elevated in our core markets, and with heightened risk, customer demand continues to expand.
“Material inflows of capital are primarily from reinvested earnings, and as a result, our central assumption is that market fundamentals will not alter materially in the first half of 2025, absent external shocks.”
Going on to discuss expectations for results at Lloyd’s, Tiernan continued, “While 2024 forecast results are achieving target returns-on-capital metrics, it is against a moderate, large loss and cat year for most.
“Our cumulative final net loss estimates for hurricanes Helene and Milton are between $1.8 billion and $3.4 billion and I expect us to trend towards the lower end of that range.”
It’s notable that Lloyd’s had announced a UK £2 billion loss for hurricane Ian in its 2022 full-year results, so it seems possible the combined market impact of Helene and Milton could even come in lower.
Tiernan then went on to discuss the outlook for the market, “Re-forecast GWP of £59 billion is £2.5 billion, or just under 5% behind 2024 plan, driven by sensible retrenchment.
“But I am more cautious about the market than I was 12 months ago. There are rate momentum, adequacy and aggressive trading challenges pressuring sustainable growth in property, casualty and specialty respectively.”
Finally, of note to our audience, Tiernan commented on what Lloyd’s is seeing in property underwriting at this time, comments with relevance to expectations for the end of year reinsurance renewals.
“In property, we’re not seeing any notable changes to attachment points, or terms and conditions,” Tiernan said. Adding that, “Our current expectation is that the positive risk-adjusted rate change seen in property treaty during 2024, will be at least flat in 2025, driven by loss impacted lower-layers and increased demand.”
Which is positive messaging for those investors deriving insurance-linked returns by deploying capital into the Lloyd’s marketplace, suggesting a relatively stable renewal is the currently expectation.
