Rich in history and influence, Lloyd’s balances traditional values with a modern appetite for business. Ellen Bennett meets with Lord Levene and Richard Ward, who are slowly but determinedly steering the market through evolution
It’s nine o’clock on Tuesday morning and here we are on the 11th floor of Lloyd’s Tower One, at the very heart of insurance’s power and heritage. In the mahogany panelled ‘special dining room’, silver trophies and memorabilia line the walls on occasional tables and cabinets; the huge table is so highly lacquered you can see your face in it; and the Queen Mum smiles down benignly from the back wall.
But don’t be fooled – it’s not all about history. Insurance Times is here today to talk to Lloyd’s chairman Lord Levene and chief executive Richard Ward about the future of the Lloyd’s market and the insurance industry itself, at a time of unprecedented economic and political change. Against the backdrop of a once-in-a-generation recession, the market continues to post multibillion-pound results and prop up businesses, infrastructure, space missions and indeed economies across the globe. Two weeks ago, it was reported that Deloitte has been appointed to conduct a major strategic review of the market’s future role and the opportunities arising from the changing economy.
Meanwhile, down the road in Whitehall, the Labour government is serving out what are widely expected to be its final few months and, just yesterday, the Insurance Industry Working Group released a report, ‘Vision 2020’, that dominated national headlines. The report calls for greater co-operation between insurers and government, and a greater role for insurance in the provision of social infrastructure – in return, cynics might say, for concessions on tax and competitiveness. In fact, a close look reveals that Ward is clutching a copy of the report in his hand as he follows Levene into the room – he was on the working group.
A restrained review
It’s rare to get Levene and Ward together, and time is tight this morning. A curt nod and handshake from Levene – he’s rather like a scary great-uncle who deigns to appear only at the occasional funeral, where the family jostles for a place in his will – and a rather warmer greeting from Ward, and we’re off.
First up, Deloitte’s strategic review, which reports back in January 2010. They’re keen to play it down. “We need to review what we are doing on a fairly regular basis to see if there are any other ideas out there,” Levene says in his patrician tones (it’s hard to believe now that he was born into a middle-class family and was created a life peer after several decades of business success and public service, including a stint as Lord Mayor of London). “Though I would be surprised if nothing came out of it.”
Ward, who joined Levene at Lloyd’s in 2006 having made his name dragging the IPE (International Petroleum Exchange) into the modern era, explains how the review has actually been underway for some time. It was only picked up by the press this month as Deloitte started to consult widely with the market, which is notoriously chatty and difficult to control. So let’s not get carried away. “What may come out of this will be fine-tuning – we are not suddenly going to move into banking,” Levene says. Ward, who refers to his boss as “the chairman” even in his presence, adds: “We’re going to stick to our knitting – keep to the basics and remain boring when it comes to investments.”
If there’s more to this review, then these two seasoned and smooth public figures aren’t about to let on. They are in an almost unique position: their every word and action analysed by Lloyd’s, the insurance industry at large, the government and the media. For, while its role has decreased in the past few decades, Lloyd’s remains the aristocracy of insurance in the UK and the world, with all the trappings of power and responsibility that entails. Levene has made a name for himself as an ambassador for Lloyd’s around the globe, and while some members of the market bemoan his autocratic style, few would dispute the contribution he has made. Ward – younger and more amenable – is well liked and, more importantly, respected as a great operational manager who is bringing real change to the market internally.
So, what of this ‘Vision 2020’ report on the future of the insurance industry, which has outlined ways that government can encourage capital to flow into the UK? Ward accepts that other markets – Bermuda, for example – may be able to raise more capital, but says that as long as the money still finds its way to the UK (and Lloyd’s), the market remains competitive.
“That is the one big issue: tax,” Levene says.
The past year has seen a number of high-profile companies, Lloyd’s insurers Brit and Amlin among them, redomicile out of the UK because of its relatively high taxes. “Governments don’t like discussing taxes with the people who have to live with them because they feel that that’s their prerogative,” he adds, “but we have to point out to them what the affects of their policies on taxation are. We point out the issues, then they have to make that decision – sometimes they get it right, and sometimes they get it wrong.”
Closer to home, the ongoing fight for electronic reform continues to occupy Ward in particular, though he claims to be pleased with the progress. He’s even convinced the chairman. “Richard had a real blitz on this when he came, and I was the biggest sceptic,” Levene says. “I said, ‘Come on, I don’t believe anything is going to change in this place.’ But it has, you just walk around and see it – it’s not just halfway down the slope now; we have started to get close to the bottom.”
Is there a contradiction between the modernisation agenda and the tradition and – some might say – stuffiness that surrounds us here in Lime Street? “What’s ‘very traditional’?” expostulates Levene rhetorically, himself the embodiment of it. “If you walk around the building, you will see we don’t have too many mahogany-panelled rooms here any more.
Go that way, and you’ll see glass-walled offices and open-plan desks – it’s a very modern atmosphere.”
So why aren’t you allowed in without a tie? “Whether people should wear a tie or not is a different question, I happen to have very strong views on that,” says Levene, the scary great-uncle again. “When people are at home on the weekend, they can dress casually – as I do. Wearing a shirt and tie induces a more businesslike atmosphere. Do you want to buy half a billion pounds’ worth of reinsurance from someone who’s sitting there in a t-shirt and shorts?”
Good Lord, no. And, as Ward chips in: “The underwriting room is the showcase of the Lloyd’s market. We have visitors from around the globe pouring into that room to meet with underwriters.”
What they don’t admit, but is probably just as true, is that the traditions of Lloyd’s, from the ties down to the liveried doorman, give it a historical cachet, a “tourist factor” that keep it at the top of the pile when other, newer markets may be more efficient and adaptable. It’s a concept that the British aristocracy (and tourism industry) has been dining off for generations.
Levene and Ward already have one fairly significant set of changes under their belts: the amendments to the Lloyd’s Act that received parliamentary approval at the end of last year. As well as allowing Levene a third three-year term as chairman, the reforms opened up the market to non-Lloyd’s brokers – though none have taken advantage as yet. So why bother? “It’s not pointless. We don’t know who is going to take it up; the market will change,” Levene says. He and Ward mention several times “five to ten years” as the expected period of evolution.
For Levene at least, six months into his final term, Lloyd’s will be a distant memory by then. So what does he hope to have achieved? “A situation where, when the CEO or CFO of large corporations review their insurance annually and look down the list and they see the name Lloyd’s, they say, ‘Oh, that’s fine.’”
It’s a fairly modest ambition for a man of his stature, but should be seen in context: when he took the job in 2002, the market was so tainted by asbestos and other scandals that people were ashamed to admit to working there. That seems a long time ago now.
But time’s nearly up, and after five minutes for photos (“What are you doing, a 14-page supplement?” Levene grumbles), the audience is over. The 67-year-old peer of the realm is back on his feet and, with his super-efficient chief executive at his side, off to deal with matters of state and high finance. IT