Lloyd's first half of 2026, as board questions
We read the Lloyd's Half Year Report 2026 (PDF) and turned its numbers into the questions a managing agent's board should be ready to answer.
Overview
Lloyd's half year results 2026, in brief
Lloyd's of London had a solid first half of 2026. Gross written premium grew 6.9%, from new business and new entrants, against 6.2% a year earlier. The combined ratio improved to 90.8% from 92.5%, so underwriting profit rose to £1.9bn from £1.5bn. Excluding major claims, the underlying combined ratio worsened to 84.0% from 82.1%, so the gain came from lighter major claims. Investment return fell to £1.8bn from £3.2bn, because rising yields pushed down the value of bonds. Profit before tax fell 16.8%, to £3.5bn from £4.2bn.
“The market has produced a solid result for members over the first half of the year, our outlook for 2026 is unchanged and the pipeline of high-quality underwriting talent looking to join Lloyd's remains strong.”
The outlook is less comfortable. Rates fell 6.7% in the half, and rate adequacy is eroding in core markets. Lloyd's kept its full-year outlook: £64bn of premium, plus or minus 5%, and a combined ratio of 90% to 95%. Tiernan sees it weighted to the downside from a high point, in a world he calls “structurally disorderly”. He says 2027 planning “will be different” and “we should not expect growth in core markets” (p7).
Headline figures
- GWP growth6.9% Up, better than H1 2025. H1 2025 6.2%
- Combined ratio90.8% Down, better than H1 2025. H1 2025 92.5%
- UW profit£1.9bn Up, better than H1 2025. H1 2025 £1.5bn
- Investment return£1.8bn Down, worse than H1 2025. H1 2025 £3.2bn
- PBT£3.5bn Down, worse than H1 2025. H1 2025 £4.2bn
- Rate changerisk-adjusted(6.7)% Down, worse than H1 2025. H1 2025 (3.5)%
- FY26 GWPLloyd's outlook£64bnplus or minus 5%
- FY26 CRLloyd's outlook90% to 95%
Green: better than H1 2025. Red: worse. Grey: no better or worse call.
Questions to consider
Questions the board should be considering
The five questions below come from one public report, read the way a board would read it. In later posts, we put them to Halden, our fictitious managing agent, and show the answers in its own reports.
Board pack
The five questions as an 8-page board paper, ready for your next board meeting.
Key risksWhich of these five risks would we hear of from Lloyd's before our own reports?
Five risks the Chief Executive named, all in play at once
What it shows
Tiernan's point is that these risks interact, so they compound. Physical damage can trigger cyber disruption, and sanctions can change what is insurable overnight (p5). Reported one at a time, they hide how one sets off the next.
Risk web
Eroding rate adequacy
Rates fell 6.7%, against 3.5% a year earlier. Adequacy still clears a 95% net combined ratio, but is eroding in core markets.
Physical risk, claims inflation
Fire, flood and drought, amplified by climate change, are rising in frequency and severity. Rising asset values and legal system abuse inflate claims.
Cyber and digital dependence
Economies rely on cloud infrastructure and subsea cables. Cyber warfare and the weaponisation of AI widen the threats and speed them up.
Sanctions and financial chokepoints
Banking and clearing systems are chokepoints for economic pressure. Sanctions reach beyond their targets, as aviation losses after the invasion of Ukraine showed.
Geopolitical fragmentation
Lloyd's warns the global order could fragment further. The Middle East conflict cost £1.4bn in the half, but Lloyd's expects no capital event.
Performance analysisHow much of our 2027 profit plan rests on investment return?
Profit before tax fell to £10.19 per £100 written, from £13.09
What it shows
Underwriting carried more of the profit. The combined ratio improved to 90.8% from 92.5%, lifting underwriting profit to £5.53 from £4.64 per £100. Rising yields cut investment return to £5.17 from £9.76. With rates down 6.7%, softer pricing now squeezes the larger share of profit.
Where every £100 of written premium went
Green: better than H1 2025. Red: worse. Grey: no better or worse call.
| Item | H1 2026 per £100 (£m) | H1 2025 per £100 |
|---|---|---|
| Gross written premium | £100.00 (£34,710m) | £100.00 (£32,470m) |
| Not yet earned | £21.90 (£7,603m) | £19.59 |
| Reinsurance | £18.10 (£6,283m) | £18.89 |
| Claims | £32.63 (£11,325m) | £34.87 |
| Expenses | £21.84 (£7,580m) | £22.01 |
| Underwriting profit | £5.53 (£1,919m) | £4.64 |
| Investment | £5.17 (£1,795m) | £9.76 |
| FX and other | £(0.51) (£(178)m) | £(1.31) |
| Profit before tax | £10.19 (£3,536m) | £13.09 |
Segment analysisWhich of our classes could swing to a loss before our board sees it?
Specialty swung from a £223m profit to a £183m loss
What it shows
The market's underwriting result rose, but two classes moved hard in opposite directions. Specialty swung to a £183m loss as gross claims rose to £1,304m from £395m, while reinsurance acceptances swung to £823m from £(26)m. A rising total can hide a class-level loss, in the market and in a syndicate.
Specialty's own reinsurance softened its £183m loss, moving from a £210m cost to a £220m benefit.
| Class | Share of GWP | GWP H1 2026 | Gross combined ratio H1 2026 | UW result H1 2026 | UW result H1 2025 |
|---|---|---|---|---|---|
| Property | 20.6% | £7,155m | 86.7% | £820m | £973m |
| Casualty | 21.6% | £7,487m | 97.7% | £171m | £112m |
| Marine, Aviation & Energy | 11.5% | £3,987m | 102.1% | £(72)m | £(163)m |
| Specialty | 4.9% | £1,698m | 113.2% | £(183)m | £223m |
| Reinsurance acceptances | 41.4% | £14,366m | 90.7% | £823m | £(26)m |
- %Share of gross written premium (GWP), H1 2026, and GWP in £m*
- Underwriting result, H1 2026
- H1 2025 (marker and arrow)
- Gross combined ratio, H1 2026 (our bands)
- Strongbelow 92%
- Marginal92% to 100%
- Lossabove 100%
Gross combined ratio is our calculation from Note 8, so it does not compare with the market's 90.8% net combined ratio.
* Totals include Life (GWP £19m and £17m; underwriting result £(2)m and £1m). Lloyd's adds £388m (H1 2025) and £359m (H1 2026) of Society adjustments to reach the market's £1,505m and £1,919m.
Net operating expensesWhich commission levels sit behind the expense ratio in our 2027 plan?
Acquisition costs rose 11.8%, faster than premium
What it shows
Acquisition costs grew 11.8% against premium growth of 6.9%, lifting the expense ratio to 36.4% from 35.8%. Lloyd's points to higher-commission business and more profit commission. Acquisition costs are rising while premium rates fall: rates were down 6.7% in the same half.
Better than H1 2025 as a share of net earned premium. Worse. No better or worse call.
Acquisition costs +11.8% Worse.
Change in deferred acquisition costs Credit up 29.7% No better or worse call.
Administrative expenses +6.6% Worse.
Reinsurance commissions and profit participation Credit up 23.9% Better than H1 2025 as a share of net earned premium.
Total net operating expenses +6.1%
Expense ratio H1 2026 36.4%, H1 2025 35.8% +0.6 points Worse.
| Item | H1 2026 | H1 2025 | Change | Against H1 2025 |
|---|---|---|---|---|
| Acquisition costs | £8,064m | £7,213m | +11.8% | Worse |
| Change in deferred acquisition costs | £(1,476)m | £(1,138)m | Credit up 29.7% | No better or worse call |
| Administrative expenses | £2,077m | £1,948m | +6.6% | Worse |
| Reinsurance commissions and profit participation | £(1,085)m | £(876)m | Credit up 23.9% | Better than H1 2025 as a share of net earned premium |
| Total net operating expenses | £7,580m | £7,147m | +6.1% | |
| Expense ratio | 36.4% | 35.8% | +0.6 points | Worse |
Financial investmentsIf yields rise again, what would our bond losses do to our capital?
Bonds are 73% of a £96.7bn portfolio, so yields set the return
What it shows
Debt securities fell £1.3bn in six months but still make up 73% of the portfolio. Rising yields turned a £724m unrealised gain into a £421m loss, cutting investment return to 1.6% from 3.1%. With that much in bonds, yield moves set both the return and the asset values.
1Debt securities and other fixed income
2Shares, variable yield securities and unit trusts
3Participation in investment pools
4Loans and deposits with credit institutions
5Other investments
6Total financial investments
| Item | 30 Jun 2026 | 31 Dec 2025 |
|---|---|---|
| Debt securities and other fixed income | £71,026m | £72,308m |
| Shares, variable yield securities and unit trusts | £13,742m | £13,520m |
| Participation in investment pools | £6,241m | £5,739m |
| Loans and deposits with credit institutions | £4,565m | £4,542m |
| Other investments | £1,138m | £1,031m |
| Total financial investments | £96,712m | £97,140m |
Sources
- Lloyd's, Half Year Report 2026, six months ended 30 June 2026: Performance at a glance (p3); Chief Executive's statement (pp4 to 7); Market interim financial review (p8); Pro Forma Profit and Loss Account (p10); Notes 8, 9 and 10 (pp17 and 18). https://assets.lloyds.com/media-651c0e64-c1d0-4f97-90f7-883c69fe2ef2/32b2c21f-bc85-4e3b-941c-e0a5c7025fcd/2026%20Half%20Year%20Report.pdf
- Per-£100 figures in the Performance chart are our calculation from the Pro Forma Profit and Loss Account (p10).
- Gross written premium shares in the Segments chart are our calculation from Note 8, Segmental analysis (p17).
- Percentage changes in the Expenses chart and the 73% bond share are our calculations from Notes 9 and 10 (p18).
- Lloyd's, “Lloyd's market delivers solid half year results in 2026” (press release, 3 September 2026), for the publication date. https://www.lloyds.com/insights/media-centre/press-releases/lloyds-announces-half-year-results-2026