Less than £50m of business to move from Equity to Advantage says Utley
Equity Group will transfer less than £50m of business from Lloyd’s to its Gibraltan underwriting arm, its chief executive has insisted.
Recent reports had said that Equity, which was bought last year by Australian insurance giant IAG, was looking to drive some business away from it Lloyd’s operation, Equity Red Star, to Advantage, its underwriting arm based in Gibraltar.
Chief executive Neil Utley admitted that some of the private motor business produced by the group’s retail broker network, Equity Insurance Brokers, would be underwritten by Advantage instead of Equity Red Star, but played down the amount.
Utley said: “Equity Insurance Brokers business will move to Advantage, but less than £50m will move over time.”
He said the reason for the move was down to the lower cost of writing business in Gibraltar. “Lloyd’s is generally more expensive than Gibraltar. If you are a pound more expensive [than a competitor] in private motor you will lose the business.”
Private motor business, he said, would be underwritten by Advantage.
IAG owns 100% of the capacity in Advantage but only 64% of the capacity in Equity Red Star.
“Equity Red Star must be run for the benefit of all shareholders. It makes sense for it to underwrite the right motor [business].”
Equity Red Star, with a capacity of £420m in 2007, is the largest motor insurer at Lloyd’s. Less than 20% of the business by premium is provided by Equity’s brokers, Utley said.
There have been concerns about the future of personal lines business at Lloyd’s after insurers such as Link and Zenith moved business from the market to Gibraltar.
The Lloyd’s Market Association (LMA) is looking at whether the cost of operating at Lloyd’s will drive out further personal lines insurers.