Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Aviva is re-entering Lloyd’s of London for the first time in more than two decades to boost its exposure to the thriving commercial insurance market.
On Monday, the company announced it was buying Lloyd’s insurer Probitas for £242mn. Aviva said Lloyd’s, a centuries-old market selling specialist insurance and reinsurance covering everything from cyber attacks to hurricanes, was a “major source of untapped growth” for the FTSE 100 group, which is a significant provider of home, motor and life insurance, and has more than 18mn customers worldwide.
Aviva chief executive Amanda Blanc said the deal “opens up new opportunities to accelerate growth” in the group’s general insurance business.
Probitas, which provides commercial insurance including professional liability and property catastrophe cover, will keep its management team and brand. Aviva intends to provide additional capital to the unit.
Probitas’s Lloyd’s underwriting syndicate has increased its annual premiums by a fifth every year since 2019, taking in £288mn in 2023.
Over the same period, it achieved a combined ratio — claims and expenses as a proportion of premiums — of 82 per cent. Anything below 100 per cent represents a profit.
Aviva said it expected continued “strong growth” at Probitas this year, driven by “favourable pricing trends, new product lines and expanded local distribution”. The insurer, which will publish full-year results this week, left the Lloyd’s market in 2000.
The business said Lloyd’s would give it access to significant sales volumes and broader international distribution networks.
The acquisition, which involved buying out Probitas investors including Saudi Arabia reinsurer Saudi Re, comes after a long period of rising prices has lifted the commercial insurance market.
Global commercial insurance prices, which include everything from property to management liability, have risen for 25 consecutive quarters, according to data provided by broker Marsh.
Analysts at Bank of America said the deal should not worsen the outlook for capital returns at Aviva. The insurer was likely to “receive questions about potentially buying a commercial lines [property and casualty] business at the top of the cycle . . . but the purchase price seems reasonable in this respect”, they added. Aviva said the price represented a valuation of about seven times Probitas’s expected 2026 earnings.
London remains an international hub for the sale of insurance and reinsurance, and has continued to grow despite competition from other markets such as Singapore and disruption from Brexit, which raised barriers to cross-border sales.
Last month Japanese insurer Mitsui Sumitomo said it would increase its underwriting capacity at Lloyd’s and the wider London market that surrounds it.
Lloyd’s chief executive John Neal, who is leading a push to encourage outside investors, last year predicted insurance spending would double in the next decade because of worries about risks such as climate change.
