The head of international boutique broker UIB talks to Saxon East about his favourite hobby (work), how he keeps hiring through a recession and why staying on the move is good for business.

Bassem Kabban divides his time between London, the Middle East and Japan. His broad shoulders and powerful handshake reveal that wherever he is, he makes time for a daily gym workout.

Born in the Lebanon, he speak four languages, loves Japanese culture and has filled his Mansell Street office with Japanese art. But there is no doubt that his driving passion is his work.

Insurance Times eventually pinned Kabban down to find out how he intends UIB to attack the recession and his plans to steal work from the major international power brokers.

What time do you get into the office?

I get in at 6.30am to check the Asian markets. I regularly travel abroad at the weekend.

When was United Insurance Brokers (UIB) formed?

UIB evolved out of Marsh McLennan Middle East in 1987 following a management buy-out. Our initial footprint was the Middle East and North Africa (MENA) region, Europe and Japan. Initially, we concentrated on their oil-related risks. We offered those developing economies access to international markets at competitive prices with a quality service second to none. Two decades later, those principles are still core to UIB’s offer and, unsurprisingly, many of our initial clients are still with us.

What are your main lines of business and how much money does UIB make?

UIB offers expertise in many areas of insurance and reinsurance including aviation, space, casualty and liability, construction and engineering. The company’s UK accounts show pre-tax profits of £1.6m against turnover of £20.7m in 2007.

How do you see 2009 playing out?

With negligible interest rates, carriers will have to work very hard to achieve an underwriting profit without the benefit of investment income. For some, that will be a major challenge in an environment where the insured will continue to seek premium reductions.

Are you cutting costs?

As a private company, we have a lot of shareholders in the building. When we make decisions, we know the people and we know their families. So decisions related to redundancies are tough for us. It is different for the big brokers where they are satisfying analysts all the time, looking after their shareholders’ value and giving a return to the shareholders. It is very easy for a chief executive to cover his eyes and say: “Right, I want 20% redundancies.” If the issue remains we would look at it in terms of tightening expenses but certainly redundancies are not the solution.

In fact, we have hired 10 new staff since September. UIB recently signed two former Willis aviation employees and another two from Aon.

But can UIB pay the salaries of experienced brokers?

The guy who has been getting £150,000 at Aon knows I am not going to pay it, as I do not want to upset my balance. If he is not working, he has to decide: “Would I be prepared to work for a lesser salary?”. I link a package to his performance. If he does well, good luck to him.

How does UIB see itself performing in 2009/10?

We have generated steady growth over the past decade. In 2008, we benefited from a weakened pound with almost half of our brokerage growth coming from favourable exchange rates. Most economists appear to suggest that we will experience volatile exchange rates for some time to come – perhaps currency stability will never return. Having said that, our plans do not anticipate any further weakening of the pound. We were never beneficiaries of the [Marsh Inc] contingent commission arrangements as exposed by [New York Attorney General Eliot] Spitzer. Since their removal, the playing field has become more level but competition more intense.

What opportunities do you see in the future?

Today with all the mergers [Aon bought Benfield for £844m last year], certainly companies do not want to end up with 70% of their business with Aon, so they have to restructure to maintain the balancing. So if I do not go and sit in front of them at this time to influence that decision, I have lost an opportunity. That is why I am travelling so much.

Do you think you spend too much time travelling?

As each year goes by, we have to work harder to earn less. We have to operate smarter and faster. We have to travel to meet our clients and markets more often. We have to refine our processes to remove duplication. We have to invest large sums in technology to become more efficient. That process is ongoing.

On the subject of technology, what do you think of electronic reform?

Distribution is key and electronic communication will progressively change the business model. UIB intends to be in the forefront.

What is your view of the amendment to the Lloyd’s Reform Act which opens the market up to non-accredited brokers?

As a market, Lloyd’s has proved itself to be a viable institution adapting to changing conditions. Amending the Lloyd’s Act 1982 is part of the long history of adaptation. Acceptance of business from non-Lloyd’s registered brokers is a major development. In implementing this change, managing agents are required to apply the same prudential standards that applied to Lloyd’s brokers. This will create a level playing field. The other change is the repeal of the divestment provisions whereby managing agents must disclose transactions with a related intermediary. This would ensure greater transparency.

What other issues do you see as challenges for the industry?

During the past decade, we have seen the gradual increase of local retention of business in countries where most business had traditionally been ceded to London. That trend will continue.

We have created a hub structure to enable our clients to benefit from that very move. Our regional hubs, currently in Dubai International Finance Centre and Singapore, offer our clients secure coverage in their regional markets at highly competive prices. That strengthens the regional economies and extends the UIB offering. IT