Underwriting Discipline Supports Profitability Insurers operating in the London market continued the strong momentum in 1H24 after reporting record profits in 2023. Companies are still benefitting from a strong rating environment, which has supported underwriting profitability. Combined ratios also continued to improve due to underwriting discipline, averaging in the low-to-mid 80s, with Lloyd’s of London reporting the strongest results in over a decade. Although still high, great efforts have been made to introduce operational efficiencies via digitalisation initiatives to reduce expenses, especially at Lloyd’s. Rate Increases Continue, Albeit at Lower Levels than in 2023 Fitch Ratings expects positive pricing trends in the London market to continue into 2H24, though at a slower rate than in 2023. This follows a period of high inflation, pandemic and natural disaster losses, and challenges in the cyber insurance sector. Price increases in the London market have kept up with inflation, and in some cases outpaced it, especially in the property (re)insurance lines, with average rises in the high single digits in 2H23. Strong Investment Returns Contribute to Bottom-Line Profitability Strong investment returns, on the back of higher reinvestment yields, significantly contributed to London market insurers’ bottom-line profitability. Beazley and Lloyd’s of London achieved very strong investments results in 1H24 of USD252 million and USD2.1 billion, up from USD144 million and USD1.8 billion, respectively, in 1H23. We expect London market insurers investment performance to remain strong in 2H24 as interest rates remain relatively high.