By Rebecca Delaney

April 8 - (The Insurer) - Investor expectations for positive underwriting returns at Lloyd's are accelerating "almost to the point of impatience", the RISX equity index for 2024 shows.

The RISX equity index was created by Insurance Capital Markets Research (ICMR) as a benchmark for the global specialty (re)insurance sector with underwriting subsidiaries at Lloyd’s.

The index is based on publicly listed global carriers that own managing agencies within the Lloyd’s market, currently controlling more than two-thirds of Lloyd’s premium and capital. The companies are then weighted to reflect Lloyd’s aggregate risk profile, with the index weighted combined ratios and returns on capital mimicking the Lloyd’s market as a whole.

The top 10 RISX constituents in 2024 are led by Beazley (10.37%), followed by Fairfax, Tokio Marine and QBE. It also includes Munich Re, Hiscox, AIG, Axa, Axis and Hannover Re.

The second annual Lloyd's Insights Report by ICMR and the Lloyd's Market Association (LMA), published on Tuesday, identified a closeness in performance of the reported premium weighted RISX portfolio and Lloyd’s reported pro-forma results.

While Lloyd’s results tend to be slightly more volatile, but with better results in years with benign major loss activity, the long-term average return for Lloyd’s investors and the RISX index over a 20-year period was "virtually identical" at just over 10% per annum.

"With the performance demonstrated in 2024 and 2025, capital markets are still clearly expecting great things of our industry’s performance. The challenge will be for the Lloyd’s market to live up to those expectations," said the report.

The report continued that, as in the prior year, 2024 saw several investment initiatives into One Lime Street that failed to proceed.

"This might suggest greater reticence on the part of “direct” investors in risk, although the RISX index performance in 2024 and 2025 YTD suggests growing confidence almost to the point of impatience," it said.

One reason cited for the lack of success of some of the initiatives was the difficulty in efficiently deploying raised funds, as Lloyd’s rules mean that the capital required for Funds at Lloyd's (FaL) to support a portfolio of syndicates takes three years to deploy (under the assumption it is fully allocated on day one). This also does not count the time taken to build relationships and syndicate capacity negotiations.

"If investors have appetite for the favourable returns with lower correlation of the sector as a whole, rather than merely wanting to become Names at Lloyd’s, a more efficient way of deploying funds from day one must be found," said the report.

"This may take the form of a 'bar bell' approach, deploying funds raised in a liquid form in the sector initially, then using those funds to ramp up FaL only as and when needed. This would ensure maximum deployment to the sector over the life of the investment, which is usually what investors are seeking."

Last month, Lloyd's posted an investment return of 4.9 billion pounds ($6.26 billion) for 2024, down 7.5% on 2023.

Over a 20-year time horizon (which, as the report noted, essentially encompasses at least two full underwriting cycles), Lloyd’s has made a cumulative net profit of 49 billion pounds, including notional investment return on Funds at Lloyd’s and Lloyd’s central assets.

This represents an aggregate return on capital of 10.4%, or around 7.4% above risk-free rate.

Syndicate investment return has been just over 17 billion pounds during the period, varying as a percentage of financial assets between -3.3% (2022) and 6.4% (2007).