Lloyd’s of London has warned it will suffer losses of £1.4bn as a result of the war between the US and Iran.
The insurance market, which dates back to the 1680s, said it expected to pay out the sum to policyholders after fighting in the Middle East triggered major claims.
Iranian strikes on Dubai and Qatar have caused significant damage to buildings and infrastructure since the start of the conflict.
A recent strike on a petrochemicals plant owned by Sabic, the Saudi Arabian chemicals company, is expected to result in an $800m (£600m) insurance claim, according to the Financial Times.
Patrick Tiernan, Lloyd’s chief executive, said “political violence, terror and marine war” were the “main drivers of the losses” in the Middle East.
The £1.4bn hit equates to around a quarter of the losses Lloyd’s has taken from the war in Ukraine since Russia’s full-scale invasion in 2022.
Mr Tiernan said losses in Ukraine were exacerbated by sweeping sanctions, which led to Russia seizing more than 400 aircraft from Western leasing companies. The clash saw City insurers pay out $4.5bn to the firms whose planes were seized.
However, strict sanctions on Iran before the war meant a similar situation was avoided in the Middle Eastern conflict.
Mr Tiernan said: “The biggest driver of loss to the insurance industry – certainly to Lloyd’s – from Ukraine was the impact of sanctions on the aviation [industry].
“That hasn’t been the case in the Middle East. The Gulf was comprehensively sanctioned in advance. The cover isn’t there.”
The war losses contributed to a 17pc drop in Lloyd’s profits to £3.5bn in the first half of the year. Lloyd’s pays its profits directly to members, who include everyone from wealthy individuals to hedge funds and investment firms.
Lloyd’s also announced it had overhauled its governance in the wake of the scandal surrounding John Neal, its former boss.
Mr Neal was accused of having a workplace affair with a colleague, Rebekah Clement, after stepping down as the insurance market’s boss in 2025.
An investigation by Lloyd’s subsequently found “no conclusive evidence” that the pair had a romantic relationship.
However, it determined Mr Neal failed to disclose a “sufficiently close” relationship with Ms Clement. The PR executive has since threatened legal action against Lloyd’s.
Both Mr Neal and Ms Clement declined to answer questions about the nature of their relationship during the investigation, and Mr Neal also declined to provide Lloyd’s with access to his mobile device.
Lloyd’s governance overhaul will include more stringent disclosure rules and a new duty of candour imposed on the chief executive.
Mr Tiernan said: “[Sir Charles Roxburgh] when he came in as chair, was very open and very determined to bring the level of governance at Lloyd’s up to, as he would see, public company standards of governance.”
“This is an industry that’s built on trust. And as the home of insurance, we’ve got to hold ourselves to the highest standards because we actually enforce standards of culture and governance across the Lloyd’s market.”