John Neal's legacy: Lloyd's grows GWP by 56% in six years

By Henry Gale

May 27 - (The Insurer) - In the second part of our look back at John Neal's time in charge at Lloyd's, we reflect on his efforts to grow the Lime Street market over the past six and a half years.

• John Neal aimed for $100 billion in premiums by 2026

• Lloyd's growth driven by rate increases, not volume

• New entrants such as Aviva and Convex boost Lloyd's future prospects

Rate increases have driven most of the growth at Lloyd’s since 2018, but Neal has made meaningful efforts to attract more business to the market in the long term.

In his early months as CEO of Lloyd’s, Neal chastised the market for prioritising expansion over profitability, after poor underwriting results necessitated drastic remedial action. But growth ambitions have always been part of his vision for Lloyd’s.

“I have heard this idea that Lloyd’s could become a slightly smaller but better-performing corporate specialty insurance marketplace,” Neal said at The Insurer’s London Insurance Forum in February 2019.

“That’s not what I am thinking at all. We have got to think bigger and better, not smaller.”

By early 2024, after underwriting discipline had improved, this had crystallised into an eye-catching target: that Lloyd’s could hit $100 billion in gross written premiums.

Excluding the effects of currency movements, Lloyd’s premiums had grown 15.6% in 2021, 15.5% in 2022 and 11.5% in 2023. A return to 15.5% growth every year for the next three would have seen it reach the $100 billion mark in 2026.

But it was not to be. Lloyd’s 2024 results revealed that premiums had grown by 6.5% in 2024, or 8.8% excluding currency movements — no small achievement, but not nearly enough to stay on track with the original target.

Market sources had told The Insurer in the third quarter of 2024 that the Corporation was seeing a five-year horizon for Neal’s target as more realistic. Indeed, 8.8% growth for another four years would see Lloyd’s hit $99 billion in 2028.

However, speaking to The Insurer TV in September 2024, Neal had suggested the $100 billion target might not be ambitious enough.

“Insurance is growing at twice the rate of GDP at the moment, so there’s a huge opportunity for us,” he said. “Look at the U.S. excess and surplus market. In seven years, it would have doubled.”

Neal added: “If we demonstrate the value proposition of not just Lloyd’s, but London, we should have a significant percentage, double-digit percentage of the world that we want to operate in.”

But the factors behind the market’s premium growth in recent years suggest the goal may become increasingly difficult to reach as the market softens.

Between 2018 – the year when Neal took over in October – and 2024, the market’s gross written premiums increased by 56%. But 46 percentage points of that can be attributed to rate increases, enabled by the hard market that characterised Neal’s tenure.

Even taking 2020, the last year when exposures decreased, as a baseline, rates have contributed more to Lloyd’s growing premiums than increases in volume of business.

And now Lloyd’s can no longer rely on rates to drive market growth. In Q1 2025, average risk-adjusted rates across the market were already falling by 3.3%, chief underwriting officer Rachel Turk said earlier this month, and the Corporation now expects this year’s premiums to be closer to 60 billion pounds ($81 billion) than the 65.5 billion pounds originally planned.

But volume has grown significantly at Lloyd’s since 2020, having successfully walked the tightrope of cracking down on underperformers while avoiding too much business leaking out to company markets.

As a result, Lloyd’s escaped the “slightly smaller but better performing” predicament, at a time when the global premium pool continues to grow.

And the effects of some initiatives Neal heralded to bring growth to the market may be realised more in the longer term.

One of those is the reintroduction of captive insurers to Lloyd’s, with Google establishing Quaerere Syndicate 1100, managed by Apollo. While Quaerere’s $25 million in premiums made little difference to Lloyd’s 2024 result, a large cohort of captives could do if others follow.

The other is Neal’s drive to attract more international (re)insurers that lack a presence in the market. This has seen some successes that are likely to affect Lloyd’s top line for 2025 and beyond.

Aviva announced its re-entry into the Lloyd’s market in February 2024 with a deal to acquire managing agent Probitas, which closed in July. Since November, Probitas has started underwriting seven new classes of business: marine; construction; renewable energy; contingency; M&A; political violence and terrorism; and accident and health.

MGU The Fidelis Partnership entered the market with a new syndicate last July, which wrote $167 million in gross written premiums. It said last year that it planned to reach $450 million in 2025.

The latest high-profile entrant has been Convex, whose Syndicate 1984 is targeting 150 million pounds (around $200 million) of premium for its first partial year of account. Convex’s Lloyd’s platform will underwrite a share of the specialty carrier’s existing accounts alongside new business.

Others may well follow. Allianz has held discussions with several owners of Lloyd’s businesses and was linked with Fenchurch Advisory to explore options to acquire a managing agent, The Insurer reported last year.

South Africa’s Santam was engaging with Lloyd’s last year on the launch of a syndicate, while Australia’s IAG has also been linked with a market entry.

In recent years, Lloyd’s has proven it can get bigger and more profitable at the same time, even as its largest insurer Beazley has moved to shift some of its business outside the market.

While much of the premium growth during Neal’s tenure was a feature of hard market conditions, the impact of his efforts to persuade more big names to join the market will only be seen in a longer time frame.

It remains to be seen whether more of the world’s specialty carriers, MGAs and captives end up seeing a Lloyd’s platform as fundamental to growing their businesses. If they do, it would be an impressive legacy.

In John Neal’s last week as CEO of Lloyd’s, The Insurer is reflecting on how the Lloyd’s market has changed between his appointment and departure, and his role in shaping it. Read yesterday’s piece on underwriting performance here and stay tuned for our takes on Lloyd’s modernisation and culture later this week.