Fitch concluded that the Lloyd’s market’s disciplined approach to underwriting, reserves and investment management positions it well to weather a softer pricing cycle over the next two years.
The global credit ratings agency stressed that Lloyds will continue to maintain a very strong capital position and expects its credit profile to remain strong through 2026, even as pricing conditions begin to soften and claims related to the Iran conflict emerge.
The agency pointed out that underwriting performance remained highly resilient, with Lloyd’s underwriting profit of £5.2 billion, essentially the same as the previous year.
The combined ratio remained at an excellent level of 87.6%, only slightly higher than in 2024, while significant losses were relatively small and the claims ratio was lower than the previous year. Fitch attributed this performance to good loss experience and disciplined underwriting.
At the same time, Fitch noted that market conditions are changing. Risk-adjusted pricing will fall 3.7% in 2025, marking a reversal after years of stronger interest rates.
Fitch expects this downward trend to become more pronounced in 2026, although it highlighted that pricing remains at a level that should continue to support solid underwriting performance despite broader economic and geopolitical uncertainty.
Fitch also noted that Lloyd’s is exposed to the impact of the Iran conflict through its specialized businesses such as maritime and aviation warfare, political violence, trade credit and energy.
However, Fitch does not expect widespread claims to emerge from standard property or cyber policies, as these policies typically exclude war-related events. Fitch currently views the situation as primarily an earnings impact, but it warned that a protracted conflict or broader global market disruption could exacerbate volatility.
In terms of capital strength, Fitch highlights that Lloyd’s solvency profile remains very strong. Market-wide Solvency II coverage reached 200% by the end of 2025, comfortably exceeding the internal risk threshold, while central solvency coverage rose significantly to 496%, supported by reinsurance protection within central funds. Fitch considers Lloyd’s capitalization and leverage metrics to be fully consistent with its current rating levels.
Fitch further highlighted the prudence of Lloyd’s investment strategy, noting that its portfolio is heavily concentrated in high-quality bonds and cash with relatively short maturities. Investment income will be strong in 2025, contributing £6 billion. In addition, Fitch emphasized that reserve practices remained cautious, with reserve margins increasing to £6.6 billion out of total net claims of £58.8 billion.
Overall, Fitch concluded that Lloyd’s’ disciplined approach to underwriting, reserving and investment management allows it to weather a softer pricing cycle over the next two years, maintaining strong credit fundamentals even in less favorable market conditions.
