Tiernan warns "blunt instruments" if market discipline slackens

By Rebecca Delaney

May 15 - (The Insurer) - Incoming Lloyd's CEO Patrick Tiernan issued a stark warning in his final market message as chief of markets that disciplined and sustainable profitability will continue to be in sharp focus for the Corporation as the market navigates "sliding" moderating underwriting conditions.

Lloyd's announced last week that Tiernan had been appointed CEO with effect from June 1, succeeding John Neal who assumed the role in 2018.

Tiernan has served as chief of markets at One Lime Street since May 2021.

"Looking back over the past four years, two words dominate: disciplined growth. We've worked together to build a more resilient, a more focused and a fundamentally stronger marketplace," said Tiernan in the Corporation's Q2 2025 market message on Thursday.

"Turning to the present, let me be blunt. If we don't maintain discipline and sustain profitability, the rest won't matter. It's as simple as that."

He continued: "Moderating underwriting conditions typically manifest as slides, not ladders, and it's pretty tricky to course-correct when halfway down and picking up speed. If we want a soft landing, plan from the top and be deliberate today."

Tiernan added that the barometer of sentiment has tipped negative, with the risk of acting too late to secure disciplined profitability now outweighing the risk of preemptive action.

He noted that this warning was not specific to any line of business or syndicate, but rather a market-wide admonition following cases of "egregious" trading behaviours.

"Even if there are unintended consequences of a strategy that makes sense in a boardroom, they don't make sense in today's underwriting room. It requires all of us to demonstrate discipline now to retain the sustainable health of the market," said Tiernan.

"We are currently using surgical tools, but if the market doesn't self-diagnose we will have to bring out the blunt instruments in short order. This would be a travesty given all you've achieved in the last five years."

Looking ahead, Tiernan underlined that the market's licences, permissions and financial strength hold increased strategic value in the heightened risk environment, with a general appetite to be risk-aware, as opposed to risk-averse.

Syndicates will be expected to consider and monitor the economic outlook, shifting trade relationships, and the potential for geopolitical conflict, and must also demonstrate preparedness for a range of realistic scenarios in order to be supported by the Corporation when expanding into markets and risk classes with attractive risk-weighted margins.

"That brings me to our call to action. To my mind, we are all saying the right things both publicly and privately about discipline, about pricing, about terms and conditions, but are we doing the right things all the time? Are you as CEOs, COOs, CFOs and directors seeing your strategy reflected in risks bound?" Tiernan concluded.

"As the leaders of the market you set the tone. You define what good looks like, and we need to be absolutely sure actions match words."