Lloyd’s Q2’25 Market Message: risk awareness, not risk aversion, marks a defining juncture

As the Lloyd’s marketplace charts its course through a more uncertain environment, Q2 2025’s Market Message came with a clear directive: “We aren’t risk off, but we are risk aware.”

At the heart of this quarter’s address was Patrick Tiernan, speaking for the final time as Lloyd’s Chief of Markets before stepping into his new role as CEO.

His closing message anchored a session that underscored the fragility of the current market, the pressure on underwriting margins, and the elevated expectations for syndicates operating under Lloyd’s banner.

The Lloyd’s marketplace finds itself at a critical juncture. While the 2025 business plan had projected £66bn in gross written premium, the Q1 actuals told a less optimistic story. Risk-adjusted rate change (RARC) came in at -3.3%—not disastrous, but “below plan.”

Rachel Turk, Chief Underwriting Officer, was candid about the shift: “There is optimism in the 2025 plan… so I was surprised not to see more realism at Q1.” If current trends continue, Lloyd’s anticipates the 2025 year of account GWP landing “in at the low £60 billion” range.

The message to managing agents was unambiguous: “We will not support plans that are retaining top line growth aspirations and not reflecting the true impact of the rating environment on the bottom line.”

Turk and Tiernan communicated a sharpening of expectations. A more surgical and data-driven oversight is in effect: “While there is a risk that people believe we are all bark and no bite, the actions we are and have been taking are private and targeted.”

Throughout the message, Turk laid out a series of expectations for the market. These include using RARC as a floor, not a target, and clearly engaging with Lloyd’s when deviation occurs. “Trading below this level isn’t necessarily a problem, but…you must talk to us when you are not or ideally when you think you may not hit planned rack.” She added, “Underperforming syndicates should expect to be shrinking.”

Delegated business came under close scrutiny: “Doing it well is a prerequisite for those who choose to embrace delegation, and not everyone with the desire will have the capabilities.” She warned: “Trying to write these facilities from the side of desk will not be tolerated.”

On claims, the faster claims payment initiative is moving into broader adoption. Turk reported: “1.7 billion pounds is currently tied up, which is made up of 600 million pounds, one off release of redundant funds that are overdue and can be claimed now 800 to 900 million pounds release through a reduction in the average holding time of funds to two to four weeks from 12 to 14, and the net result is an annual run rate of between 200 to 300 million pounds that feels worth signing up to.”

Alex Cliff, in her first market address as Chief Financial Officer, emphasised capital resilience: “Our reserve margin stands at £5.4 billion, a combined capital base of £47 billion… this is a foundation we must protect.”

With increased market volatility, she reinforced the need for stronger connections between capital and underwriting: “Your reserving should align with your reserving policy appetite and explicitly capture the uncertainties we face.”

Tiernan’s final message was direct: “If we don’t maintain discipline and sustain profitability, the rest won’t matter. It’s as simple as that.” While the trailing data may not be alarming, he warned of trends that don’t add up: “There are increasing examples of egregious trading behaviours that belie reconciliation with logic… they don’t make sense in today’s underwriting room.”

He closed with a challenge to the market: “We are all saying the right things… but are we doing the right things all the time?” And a final reminder of what is at stake: “We must demonstrate discipline now if we want to retain a sustainable market.”

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As the Lloyd’s marketplace charts its course through a more uncertain environment, Q2 2025’s Market Message came with a clear directive: “We aren’t risk off, but we are risk aware.” At the heart of this quarter’s address was Patrick Tiernan, speaking for the final time as Lloyd’s Chief of Markets before stepping into his new…