Utley concerned as rival motor insurers move capital out of Lloyd's
The threat of Lloyd's agencies moving capital out of the 300-year-old market is intensifying as Cox this week refused to rule out moving capital to Gibraltar.
Cox Retail chief executive Neil Utley is concerned that rival motor insurers, such as Zenith and Hastings, are moving capital to Gibraltar, so that they can enjoy low solvency margins.
Utley said: "It gives them commercial advantage. If we could underwrite at a 10% solvency margin in Gibraltar that would be prudent because of our track record."
He added: "When I look at some of the names out there, they don't have the same track record. They don't have the same financial background. I really worry about it."
Utley said that a move to Gibraltar would not be made lightly. He said that Cox enjoyed a good relationship with Lloyd's that was highlighted last April when Cox struck a deal with Lloyd's to ring-fence loss-making commercial policies.
He added that commercial motor risks would undoubtedly stay at Lloyd's. "Brokers want the security of Lloyd's for these kinds of risks," he said. But Utley added that capital for private motor could end up in Gibraltar.
"If Gibraltar is here to stay and has a share of the market writing on, say, a 10% solvency margin,
I can't ignore that. You'd have to go at some point," said Utley.
But he has doubts about the Gibraltar market. "I'm surprised our regulators are allowing it to happen," he said.
He added: "We won't do anything that isn't ethically right.
"Something must happen: either a lot more capital will go out there because of the advantages, or the rules will change, or one participant will have a problem and send the wrong signals back."
"It's something for me to worry about in a year's time," he added.
Last year Ace decided to reduce its capacity in Lloyd's by £150m in order to support a new FSA-regulated insurer INA UK.