Lloyd's put a figure on the US-Iran war for the first time this week: £1.4bn ($1.9bn) in losses tied directly to six months of fighting in the Gulf. For a market that carries a large share of US-originated E&S and specialty risk, that number matters well beyond London.
Lloyd's half-year report says underwriting profitability "remained robust despite £1.4bn of losses arising from the Middle East conflict." Against £34.7bn of gross written premium and £48.4bn of capital, that's a manageable hit rather than a solvency event. Chief executive Patrick Tiernan said as much directly: "Based on exposures and damage observed to date, we do not currently expect the situation to constitute a capital event for the Lloyd's market or to have a material impact on the P&L."
Lloyd's report doesn't break the £1.4bn down by class of business. Lloyd's chief financial officer Jim Bichard told Insurance Business UK it's a net number. "That's a net number," he said. "Gross number would obviously be bigger." But the conflict has hit marine, energy and political violence lines hardest across the wider London market, tracing back to the escalation on 28 February. Lloyd's overall pre-tax profit fell 16.8% to £3.5bn ($4.7bn) for the half. Rates across the market fell 6.7%, nearly double last year's pace of decline.
Earlier this year, reporting established that the US Development Finance Corporation's $40 billion maritime reinsurance program had placed zero dollars of coverage. Backed by Chubb, AIG, Berkshire Hathaway, Travelers, Liberty Mutual and Starr, and unveiled as the fix that would restore energy flows through the Strait of Hormuz, it hasn't insured a single voyage. Brokers and underwriters told Insurance Business the program was built on a misdiagnosis: Washington treated the shutdown as an insurance-availability problem, when the market's own view was that cover had remained available throughout, just heavily repriced. Tanker traffic collapsed more than 80% before Iran's blockade was formally declared — owners judged the physical risk unacceptable, not the price of cover.
Lloyd's own report backs that up. It describes underwriters working through the first weekend of the conflict, some sleeping in their offices, continuing to quote maritime risks even as a narrative spread that cover had disappeared from the Gulf. It hadn't. New marine war facilities led by Chubb and Beazley launched in the following months to add capacity specifically for Hormuz transits — capacity that, unlike the DFC facility, has actually been used.
For brokers placing US-originated marine, energy and political violence risk into London, the practical read is that Lloyd's capacity for Gulf-exposed business held up - priced for the risk rather than withdrawn from it. War-risk premiums for Hormuz transits have moved sharply since February. Howden Re data put pricing at roughly 0.10–0.125% of vessel value before the conflict, climbing to around 2–3% by March, a jump of twenty times or more, and pricing has continued to move with the risk since. That's the figure worth building into renewal conversations, not a federal facility that has yet to write a policy.
Read next: The Iran war's hidden insurance crisis
The conflict loss lands on top of a market where rates were already sliding faster than a year ago: down 6.7% in H1 versus 3.5% in the same period of 2025. The underlying combined ratio, which strips out major claims, rose to 84.0% from 82.1%. Tiernan was blunt about what comes next: "We see the outlook weighted to the downside from this current high point in performance. Underwriting discipline and innovation are the keys to maintaining outperformance and quality of earnings."
He described the current environment as "structurally disorderly" rather than a temporary spike in volatility, pointing to pressure building across physical, cyber, financial and trade infrastructure at the same time.
Lloyd's is turning away more business, not less. Only around 20% of applications reaching third-party managing agents are passed on to Lloyd's, and £5.1bn of business was declined last year.
Lloyd's central solvency ratio rose to 503% from 496%, and ratings held steady at A+ (AM Best) and AA- (Fitch, KBRA and S&P Global). The bigger drag on H1 profit was investment return, which fell to £1.8bn from £3.2bn on unrealised losses tied to widening bond yields — a separate issue from the war losses, and one shared by most insurers with long-duration bond books this year.
