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© Lloyd’s 1
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© Lloyd’s 1
Lloyd’s and the next 327 years Entrepreneurial Insurance Symposium
Hank Watkins, President, Lloyd’s North America
September 1, 2015
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1. What is Lloyd’s?
2. What do we insure?
3. Lloyd’s in the US
4. Modernizing Lloyd’s
5. Emerging Risks and
innovation
6. Q&A
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What is Lloyd’s?
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The best known, least understood brand in
(re)insurance
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Lloyd’s key characteristicsLloyd’s is a market,
not a companyWe have a longhistory of helping clients manage risktaking, datingback to 1688
The Lloyd’smarket insurescomplex andspecialist risks
London basedinternationalbusiness
Lloyd’s expertise is based on 327years of experience and a PerformanceManagement Directorate that overseesresponsible risk taking
Regulated by the Prudential RegulatoryAuthority (PRA) and the Financial Conduct Authority (FCA)
Products aredistributedthroughbrokers andcoverholders
Lloyd’s key characteristics
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96 syndicates
of specialist underwriting
expertise
4,500
327 years of
underwriting experience
200 countries and
territories for over…
219brokers
bringing business from…
coverholdersoffering a local route
to Lloyd’s
Footprint of the business
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The world’s leading specialist (re)insurance market
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Lloyd’s + London Company Market = Total premium of US$83.62bn in 2013
US$43.33bn
Source: IUA, London Company Market Statistics Report, October 2014Exchange rate as at 31 December 2013 - £1 + $1.66
Overall London company market
US$40.29bn
US$43.33bn
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The Lloyd’s market:58 managing agents running 96 syndicates
Lloyd’s is a marketplace of independent businesses whose combined experience and expertise deliver risk transfer solutions to an increasingly complex world.
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Lloyd’s syndicates - backed by some of the best known names in global insurance
Source: Lloyd’s Annual Report 2014
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Lloyd’s global reach
15% 18%
11%
8%44%
4%Source: Lloyd’s Annual Report 2014
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Classes of business by region – 2014
Source: Lloyd’s Annual Report 2014
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Financial Results
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bn 2010 2011 2012 2013 2014
Gross written
premium
$34,759
£22,425
37,339
£23,337
40,025
£25,173
39,959
£25,615
41,717
£25,283
Combined ratio 93.3% 106.8% 91.1% 86.8% 88.1%
Investment return $1,950
£1,258
1,528
£955
2,084
£1,311
1,309
£839
1,724
£1,045
Result before tax $3,446
£2,195
(800)
(£516)
4,517
£2,771
5,320
£3,205
4,931
£3,161
Return on capital
(pre-tax) %
12.1 (2.8) 14.8 16.2 14.7
Five year overview of Lloyd’s performance
Source: Lloyd’s Annual Report 2014
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Lloyd’s ratings Three of the world’s leading rating agencies validate Lloyd’s robust
capitalisation and the market’s financial strength.
As all Lloyd’s policies are backed by mutual security, the following ratings apply to the entire market.
Source: Lloyd’s Annual Report 2014
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What Can be (Re)insured at Lloyd’s?
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The Lloyd’s market is known for its specialist expertise…
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…and an appetite for unusual risks requiring innovative solutions
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Accident & Health
Agriculture
Bloodstock
Construction
Cyber
D&O
Event Cancellation
Entertainment
Fine Arts
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Intellectual Property
Kidnap & Ransom
Political Risk
Professional Liability
Reputational Risk
Sports (including
disability)
Trade Credit
Transportation
Weather
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Lloyd’s in the US
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Breakdown of Lloyd’s 2014 total US business
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19
1
7
13
310
10
15
112
9
3
15
11
34
6
22
24 39
23
16
111
4
5
64 1511
6
-
8
-
5
28
4
39
523
65
2314
-
19
1
7
13
310
10
15
112
9
3
15
11
34
6
22
24 39
23
16
111
4
5
64 1511
6
-
8
-
5
28
4
39
523
65
2314
-
Rich MagrathWestern Regional DirectorLos Angeles
Pat TalleyCentral Regional Director Frankfort, KY/ Chicago
Rodney SmithSoutheast Regional DirectorAtlanta
Hank FeuerzeigGeneral RepresentativeUS Virgin Islands
US Virgin Islands
Atlanta, GA
3 Chicago, IL
4 Frankfort, KY
1
5 Los Angeles, CA
6
7
New York, NY
Locations
2 Boston, MA
Glenn DorrNortheast Regional DirectorBoston
Hank WatkinsPresident, NA
New York
Joseph GunsetGeneral Counsel, US
New York
Kiran BhovanSenior Manager
CommsLondon
32 members of the team in total
Lloyd’s America regional structureYour key contacts
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School of Risk Management
Industry partners Next Generation CSR
Engaging with our communitiesTrade, business, educational and philanthropic organisations
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Accessing Lloyd’s from the US
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Business streams at Lloyd’s
Business flow Capital flow
(Re) Insured
Retail broker
Coverholder/ Wholesale
broker
Members
Corporate and Non-corporate
Corporation of Lloyd’s
59Managing
agents
94 Syndicates
Lloyd’s broker
Reinsurance broker
Figures as at 31 December 2014
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Modernizing Lloyd’s Target Operating Model
(TOM)
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‘London Matters’ highlighted the threat to London's position as the global centre for commercial (re)insurance
The London Market is the largest global centre for commercial and specialty risk and is in a position of strength
Ongoing investment in making the market more accessible and
efficient
Continued strong brand with financial strength ratings
reaffirmed, outlook revised to positive
Continued focus on our collective vision and goals
Increasing retention of risk in high growth developing
markets
Higher acquisition costs make London a more expensive market to deal with than its
competitors
An inflexible business servicing model that is inefficient and
slow to change, reducing London’s competitiveness
These challenges are recognised by the market and there is acceptance of the need to change
However, the world is changing which is challenging London’s position
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We are seeking to move from a model with many inefficiencies and frictional costs to one that enables an efficient and accessible market of choice
Design principle
One touch data capture
Enhanced central services
Current operating model
Inefficient and paper based
Inflexible
Fragmented
Target operating model
Highly effective and accessible
Enhanced data sets
Economies of scale for
common activities
Design principle
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Responding to emerging risks:
our role in an
increasingly
innovative industry
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Lloyd’s defines an emerging risk as…
“an issue that is perceived to be potentially significant but which may not be fully understood or allowed for in insurance terms & conditions, pricing, reserving or capital setting”.
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Emerging risks management
Identification
Horizon scanning
Awareness
Thought leadership
Assessment
Decision-making resources (scenarios)
Quantification
For product innovation & exposure management
Evaluation
Judgment of significance
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Emerging Risks Survey 2014(Lloyd’s Managing Agents)
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Emerging Risks
View all reports at www.lloyds.com/emergingrisks
Latest Lloyd’s reports
►Drones take flight: Key issues for insurance
►Business Blackout: The insurance implications of a cyber attack on the US power grid
►Food system shock: The insurance impacts of acute disruption to global food supply
►California Flood: Central Valley risk analysis
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Until next time…
Global Underinsurance
Risky Cities
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Bridging the Gap - The cost
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Launching on September 3, 2015. Visit www.lloyds.com
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New risks provide new opportunities!
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Source: Lloyd’s 2012 Annual Report
Classes of business in 2014 Primary class of business in 1680’s
Reinsurance 38%
Property 21%
Casualty 18%
Marine 8%
Energy 7%
Motor 5%
Aviation 3%
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Email [email protected] Website lloyds.com/america
T Thank you! Stay in touch.
@lloydsoflondon facebook.com/lloydslloyds.com/linkedin
