The broking firm needs new talent after loss of casualty and exceptional risks experts
Broking firm Lonmar Global Risks is looking to bulk up its casualty capability following the departure of its casualty and exceptional risks team to rival Gallagher International in June.
The company is working to recover from a challenging 2010, in which it lost a lawsuit against former employees after their defection to fellow broker Tysers and had to repay £2.1m to underwriters after its marine division overcharged them on commissions.
These two exceptional items helped push the company into a £74,441 loss in 2010, compared with a £75,229 profit in 2009.
“We are looking to replace the casualty side, probably not in the same space as before, but it is a specialism we want to keep,” Lonmar chief executive Simon Rice said.
Rice stresses that Lonmar can still handle casualty business, but needs the right people to expand. In addition to rebuilding the casualty team, the company is seeking further growth in its binding authorities business and also accident and health.
In June, it teamed up with Lloyd’s insurer Catlin to provide a new insurance facility to medical insurance provider MediCare International. This followed the appointment of a new accident and health team from HSBC Insurance Brokers, headed by David Gray.
Rice said Lonmar continues to be on the lookout for teams and individuals. “We have identified individuals that we will be approaching and have approached. There is a lot of development on new hires, some of which will come to fruition in the next six to seven months.”
Rice described the lost legal battle with former employees, which resulted in a £1.6m hit on the 2010 results, as “a bizarre judgement”, but added: “We will continue to protect the business.”
He declined to explain the overcharging of commissions because of the circumstances surrounding the event, but said all the underwriters would be reimbursed by the end of the year. He added that the overcharging incident had prompted the broker to “look at our systems and controls” but that the company continued to do business with the affected underwriters.
Rice said Lonmar had turned a corner. 2011’s revenue would be roughly 10% down on 2010’s £20.8m before commission payback, in part due to the departures to Gallagher. But profitability would be improved because of the lack of exceptional items. “We’re looking for steady and profitable growth over three to five years.”
What is Lonmar’s history?
Lonmar was previously known as SBJ Global Risks, part of UK broking group SBJ. However, when AXA bought the group in 2008 from private equity firm Capital Z, it wasn’t interested in the global risks unit. SBJ Global Risks was bought by management in a deal led by Simon Rice and rebranded.
Who was on the team that defected to Gallagher?
A 13-strong team left in June. This included Tom Payne, Lonmar’s managing director of casualty, and Charles Heneage, managing director of exceptional risks. The 13 were released from their contracts for an undisclosed sum, which Rice describes as “substantial”.
What are its targets now?
Rice wants the company to be back to, or preferably exceed, the 2010 trading profit of £3.5m by 2013. This figure excludes the exceptional items which contributed to the company’s bottom-line loss during the year.