Best's Market Segment Report: 2024 Pricing Cuts in U.S. Cyber Generated First-Ever Reduction in Direct Premiums Written
Despite the drop in premium, the loss ratio for the U.S. cyber segment remained below the 50% mark in 2024, suggesting that the line of coverage is still profitable for those who choose to underwrite the risk. According to the report, the decrease in premiums is driven more by pricing changes than any changes in exposure.
'When premium grew during the hard market cycle, the growth significantly outpaced the pricing increases, indicating that demand for cyber insurance was increasing as well,' said Christopher Graham, senior industry analyst, AM Best. 'Considering that the premium decrease is close to the pricing decrease, that would indicate that the demand for cyber insurance is steady.'
However, the report also notes that some large organizations may be shifting their cyber exposure to their own single-parent captive insurers. Such organizations that have a favorable loss experience find it beneficial to maintain the premium under the parent company's structure and typically don't file the related cyber data reports with the National Association of Insurance Commissioners.
Among the report's other highlights:
Much of the new capacity during the hard market came from surplus lines writers. Those carriers have held—and marginally increased—their market share even as the total premium slightly contracted;
Surplus lines paper remains the prime spot for complicated cyber risks, and this is evident through the split among primary, excess, and endorsement coverage.
While surplus lines writers benefited from the hard market pricing of 2020-2022, that benefit seems to have now worn off. When new writers enter the market during a hard market cycle, those writers get the benefit of the stronger pricing without having to pay the legacy losses.
AM Best has maintained a stable outlook on the global cyber insurance segment, citing a cautious level of underwriting in a dynamic risk environment.
To access the full copy of the Best's Market Segment Report on U.S. cyber insurance, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=354887.
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A replay of the conference call will be available by 10:00 a.m. ET, July 24, 2025, via the Lazard Investor Relations website at or by dialing +1 800-839-6911 (toll-free, U.S. and Canada) or +1 402-220-6059 (outside of the U.S. and Canada). ABOUT LAZARD Founded in 1848, Lazard is one of the world ' s preeminent financial advisory and asset management firms, with operations in North and South America, Europe, the Middle East, Asia, and Australia. Lazard provides advice on mergers and acquisitions, capital markets and capital solutions, restructuring and liability management, geopolitics, and other strategic matters, as well as asset management and investment solutions to institutions, corporations, governments, partnerships, family offices, and high net worth individuals. 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These forward-looking statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. These factors include, but are not limited to, those discussed in our Annual Report on Form 10-K under Item 1A 'Risk Factors,' and also discussed from time to time in our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, including the following: Adverse general economic conditions or adverse conditions in global or regional financial markets; Changes in international trade policies and practices including the implementation of tariffs, proposed further tariffs, and responses from other jurisdictions, and the economic impacts, volatility and uncertainty resulting therefrom; A decline in our revenues, for example due to a decline in overall mergers and acquisitions (M&A) activity, our share of the M&A market or our assets under management (AUM); Losses caused by financial or other problems experienced by third parties; Losses due to unidentified or unanticipated risks; A lack of liquidity, i.e., ready access to funds, for use in our businesses; Competitive pressure on our businesses and on our ability to retain and attract employees at current compensation levels; and Changes in relevant tax laws, regulations or treaties or an adverse interpretation of those items These risks and uncertainties are not exhaustive. Our SEC reports describe additional factors that could adversely affect our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for our management to predict all risks and uncertainties, nor can management assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. As a result, there can be no assurance that the forward-looking statements included in this release will prove to be accurate or correct. Although we believe the statements reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, achievements or events. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We are under no duty to update any of these forward-looking statements after the date of this release to conform our prior statements to actual results or revised expectations and we do not intend to do so. Lazard, Inc. is committed to providing timely and accurate information to the investing public, consistent with our legal and regulatory obligations. To that end, Lazard and its operating companies use their websites, and other social media sites to convey information about their businesses, including the anticipated release of quarterly financial results, quarterly financial, statistical and business-related information, and the posting of updates of assets under management in various mutual funds, hedge funds and other investment products managed by Lazard Asset Management LLC and Lazard Frères Gestion SAS. Investors can link to Lazard and its operating company websites through CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION (U.S. GAAP - unaudited) As of June 30, December 31, ($ in thousands) 2025 2024 ASSETS Cash and cash equivalents $978,259 $1,308,218 Deposits with banks and short-term investments 237,141 268,684 Restricted cash 32,908 32,466 Receivables 754,795 753,623 Investments 637,473 614,947 Property 176,240 160,402 Operating lease right-of-use assets 443,388 434,938 Goodwill and other intangible assets 395,225 393,575 Deferred tax assets 492,254 479,582 Other assets 345,703 347,558 Total Assets $4,493,386 $4,793,993 Liabilities Deposits and other customer payables $400,328 $308,213 Accrued compensation and benefits 391,048 844,953 Operating lease liabilities 518,172 505,483 Tax receivable agreement obligation 75,826 75,899 Senior debt 1,688,631 1,687,052 Other liabilities 549,319 607,610 Total liabilities 3,623,324 4,029,210 Commitments and contingencies Redeemable noncontrolling interests 83,578 79,629 Stockholders' equity Preferred stock, par value $.01 per share – – Common stock, par value $.01 per share 1,128 1,128 Additional paid-in capital 225,058 327,810 Retained earnings 1,477,618 1,472,113 Accumulated other comprehensive loss, net of tax (268,903 ) (326,742 ) Subtotal 1,434,901 1,474,309 Common stock held by subsidiaries, at cost (693,298 ) (838,069 ) Total Lazard, Inc. stockholders' equity 741,603 636,240 Noncontrolling interests 44,881 48,914 Total stockholders' equity 786,484 685,154 Expand This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see Reconciliation of U.S. GAAP to Adjusted Results and Notes to Financial Schedules. See Notes to Financial Schedules Expand This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see Reconciliation of U.S. GAAP to Adjusted Results and Notes to Financial Schedules. 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Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see Notes to Financial Schedules. See Notes to Financial Schedules Expand (unaudited) Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, June 30, ($ in thousands) 2025 2025 2024 2025 2024 Non-compensation expenses - U.S. GAAP Basis: Occupancy and equipment $33,703 $35,413 $32,031 $69,116 $64,888 Marketing and business development 29,593 27,731 25,493 57,324 49,092 Technology and information services 49,272 46,216 46,406 95,488 91,323 Professional services 24,589 18,837 23,734 43,426 43,614 Fund administration and outsourced services 30,054 26,545 27,114 56,599 53,254 Other 16,497 8,404 14,371 24,901 26,346 Non-compensation expenses - Adjustments: Occupancy and equipment (j) ($95 ) ($95 ) ($95 ) ($190 ) ($1,668 ) Marketing and business development (g) (j) (4,032 ) (2,657 ) (2,944 ) (6,689 ) (5,023 ) Technology and information services (g) (j) (35 ) (28 ) (49 ) (63 ) (84 ) Professional services (g) (j) (931 ) (1,736 ) (1,085 ) (2,667 ) (1,958 ) Fund administration and outsourced services (g) (j) (17,744 ) (15,843 ) (15,588 ) (33,587 ) (30,623 ) Other (g) (j) (3,500 ) 5,095 (776 ) 1,595 (6,256 ) Adjusted non-compensation expenses: Occupancy and equipment $33,608 $35,318 $31,936 $68,926 $63,220 Marketing and business development 25,561 25,074 22,549 50,635 44,069 Technology and information services 49,237 46,188 46,357 95,425 91,239 Professional services 23,658 17,101 22,649 40,759 41,656 Fund administration and outsourced services 12,310 10,702 11,526 23,012 22,631 Other 12,997 13,499 13,595 26,496 20,090 Adjusted non-compensation expenses $157,371 $147,882 $148,612 $305,253 $282,905 Expand This presentation includes non-GAAP measures. 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(c) A non-GAAP measure which represents adjusted non-compensation expenses as a percentage of adjusted net revenue. (d) A non-GAAP measure which represents adjusted operating income as a percentage of adjusted net revenue. (e) A non-GAAP measure which includes units of the long-term incentive compensation program consisting of profits interest participation rights, which are equity incentive awards that, subject to certain conditions, may be exchanged for shares of our common stock. Certain profits interest participation rights may be excluded from the computation of outstanding stock equivalents for U.S. GAAP net income per share. In addition, this measure includes the dilutive effect of the weighted average number of shares of common stock issuable from share-based compensation programs. (f) A non-GAAP measure which represents the adjusted provision (benefit) for income taxes as a percentage of adjusted operating income less interest expense, amortization and other acquisition-related costs. Three Months Ended Six Months Ended ($ in thousands) June 30, March 31, June 30, June 30, June 30, 2025 2025 2024 2025 2024 Adjusted provision (benefit) for income taxes $31,764 ($7,354) $8,627 $24,410 $40,842 Adjusted operating income less interest expense, amortization and other acquisition-related costs $87,111 $53,022 $61,496 $140,133 $160,317 Adjusted effective tax rate 36.5% (13.9%) 14.0% 17.4% 25.5% (g) Represents certain distribution, introducer and management fees paid to third parties, reimbursable deal costs, and (provision) benefit for credit losses relating to fees and other receivables that are deemed uncollectible, for which an equal amount is excluded for purposes of determining adjusted non-compensation expenses and included for purposes of determining adjusted net revenue. (h) Interest expense, excluding interest expense incurred by Lazard Frères Banque SA ('LFB'), is added back in determining adjusted net revenue because such expense relates to corporate financing activities and is not considered to be a cost directly related to the revenue of our business. (i) Represents losses associated with the closing of certain offices as part of the cost-saving initiatives, primarily consisting of the reclassification of currency translation adjustments to earnings from accumulated other comprehensive loss. (j) (Revenue) loss and expenses related to the consolidation of noncontrolling interests and similar arrangements are excluded because the Company has no economic interest in such amounts. (k) Represents changes in the fair value of investments held in connection with LFI and other similar deferred compensation arrangements, for which a corresponding equal amount is excluded from compensation and benefits expense. (l) Represents changes in the fair value of the compensation liability recorded in connection with LFI and other similar deferred incentive compensation awards, for which a corresponding equal amount is excluded from adjusted net revenue. NM Not meaningful Expand
