Lloyd’s insurance market expects £1.4 billion loss from US-Iran War

[LONDON] Lloyd’s of London expects losses “arising from (the) Middle East conflict” totalling about £1.4 billion (US$1.9 billion), in the insurance marketplace’s first estimate of the US-Iran war’s impact.

The market reported overall pretax profit of £3.5 billion in the six months ended June, going by results published on Thursday (Sep 3), a 17 per cent drop from the same period a year earlier and in line with Lloyd’s previous guidance. 

Iran unleashed a wave of drone and missile strikes in the region in response to attacks by the US and Israel. While most were intercepted, the bombardment inflicted damage on some physical infrastructure and energy facilities, the extent of which has been slow to emerge. 

Prices for some commercial insurance lines have started to fall over the past 24 months, as years of increasing premiums allowed insurers to strengthen their balance sheets and competition intensified. Rates in Lloyd’s market declined by 6.7 per cent in the first half of the year, it said.

“From a pricing and risk-environment perspective, we see the outlook weighted to the downside from this current high point in performance,” CEO Patrick Tiernan said. “Underwriting discipline and innovation are the keys to maintaining outperformance and quality of earnings.”

The exchange’s investment portfolio also took a hit in H1, with returns dropping more than 40 per cent year on year “due to unrealised losses on the fixed-income portfolio as a result of increasing yields”.

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Tiernan in 2025 took over as CEO of the world’s biggest hub for commercial and speciality risk.

In March, the former Aviva executive revealed a new five-year strategy for the centuries-old institution. The strategy included an ambition to boost its share in the US$1 trillion commercial insurance market, as well as attracting more third-party capital. BLOOMBERG