Key facts
- Lloyd's of London's pre-tax profit fell 16.7% in the first half of 2026.
- The marine insurance business was severely impacted by the US war with Iran.
- The Strait of Hormuz closure and strikes led to expanded high-risk zones and increased premiums.
- A $400m war-risk facility was established by Lloyd's to ensure vessel cover.
- CEO Patrick Tiernan emphasized a shift from predicting specific risks to preparing for broad eventualities.
- The underwriting result improved to £1.9bn, up from £1.5bn in the prior period.
Lloyd's of London, the world's largest insurance market, experienced a 16.7% decline in pre-tax profit for the first half of 2026, reporting £3.5bn in total profit. This downturn was significantly influenced by rising geopolitical tensions and inflation, with the marine insurance sector bearing a substantial impact during the height of the US war with Iran.
The conflict in the Middle East created severe pressure on marine business, with reports indicating thousands of vessels were trapped in the Persian Gulf. The closure of the Strait of Hormuz and strikes on ships in the waterway prompted the London Joint War Committee to expand its designated high-risk areas to include the coastlines of Bahrain, Qatar, and Oman. This led to a sharp increase in insurance premiums as underwriters priced in the heightened risk of attacks.
In response to the crisis, Lloyd's intervened in June by establishing a $400m (£316m) war-risk facility to ensure that ships could still access necessary cover in the Strait of Hormuz.
Speaking on the broader market conditions, chief executive Patrick Tiernan stated that "every major risk is now disorderly at the same time." He argued that the insurance industry must shift its strategy from attempting to predict specific risks to being broadly prepared for all eventualities, moving away from traditional probability models. "Last year we were talking about natural catastrophes, but this year, we’re talking about man‑made catastrophes," Tiernan said.
Despite the overall profit hit, Lloyd's core business showed improvement, with an underwriting result of £1.9bn, up from £1.5bn in the previous period. The market is currently navigating a softening cycle, characterized by abundant capital and high insurer profits from prior hard-market periods, which leads to reduced premium rates and compressed profit margins. Tiernan noted that existing players are increasing their business with Lloyd's, and new international entrants are also joining the market.