Lockton International’s chairman is known as a bit of a bruiser. But for a man who doesn’t mince his words, he treads carefully when he meets Insurance Times in the wake of recent comments made by his former rival and colleague Dominic Burke of JLT
“Do I think I’m aggressive?” muses Mike Hammond. “Do I sound aggressive?”
Well, yes, a bit. We’re with Hammond, chairman of Lockton International, in a top-floor meeting room in the broker’s City offices. He called the interview in response to a recent profile in Insurance Times of his one-time colleague and rival, Jardine Lloyd Thompson’s chief executive Dominic Burke. Burke got the top job three years ago – a prize many expected Hammond to win.
But more of that later. First, let’s talk Lockton International. It was created in 2006, when the London office of South African broker Alexander Forbes was acquired by Lockton, a big American broker privately held by the Lockton family. Hammond had joined a few months before, knowing that a sale was on the cards.
In the past three years, Lockton International, which encompasses all non-US business plus reinsurance, has grown significantly. As a private company it doesn’t have to report its figures, but Hammond says the firm enjoyed 15% growth in top-line revenue for the first six months of this year – an underlying figure market sources suggest is about £58m.
Having divested a couple of small retail businesses to CCV a couple of years ago, Lockton has set its sights on dominance in mid-market retail, wholesale and reinsurance. It has thrived in its areas of specialism, including solicitors’ PI where it added 200 clients this renewal season. And, helped by a £15m cash injection from its shareholders this time last year, it has started an ambitious programme of international expansion with offices in China and Dubai, to name just two.
Today, three years from the acquisition, Hammond is giving his first formal interview.
He’s got quite a reputation, has Mike. Known to be a bit of a bruiser, he doesn’t suffer fools and he doesn’t back away from fights. He wants to tell his story in response to comments from Burke, whose JLT appointment prompted Hammond’s departure. Burke, appointed after heavy lobbying, never made any secret of his intense desire for the job.
There’s a bit of chat about it before the interview begins and, suffice it to say, Hammond takes issue with Burke. He’s a little more diplomatic with the tape recorder running, but here’s what he has to say about sportsmanship and aggression: “You can be aggressive so long as you are fair. Do I want to win? Absolutely. I sometimes think some of the people I have met know the cost of everything and the value of nothing. Do you think it’s right to win at all costs?
I don’t. Does that mean I’m not aggressive? No. But there are certain things I will not do to win and there are certain things I will not do to get a job. If it’s not right, I won’t push myself.”
Phew! It’s not hard to read between the lines, is it? Anyway, whatever happened at JLT, Hammond found himself between jobs, although the phone rang soon enough. He tells the story in some detail – essentially, an old acquaintance from the States called him over to meet Lockton chief executive Dave Lockton, who explained the company’s plans to acquire Alexander Forbes and asked him to get involved.
Meanwhile, Lexicon, acting for Forbes, asked him to join their team. This he eventually did, on the understanding that he would steer the business through a sale. Things were getting a bit hairy in South Africa at the time, politically speaking, and Forbes needed to reorganise the business, hence the sale. Hammond had a clause in his contract saying that if the business was sold to any of the big three brokers, he would complete the process and walk away – but if it were sold to Lockton, or the management, he would stay and plough his earnings back into the firm. This is what he did.
The Lockton culture …
So why was he so keen on Lockton? “I thought – what an interesting company,” he says. “It’s an aggressive sales operation.” Hammond speaks at length about the Lockton culture, which all its employees get very enthused about. It seems to boil down to this: senior staff are called “producers” and are paid according to the business they retain and win. It also, as Hammond points out, focuses exclusively on insurance broking, not trying to market itself as all things to all men.
Hammond suddenly pulls out his wallet and brandishes a credit card-sized leaflet from its depths. This, it transpires, has Lockton’s ten values written on it. They’re very, very American, and arguably not the way to impress a cynical British journalist, but Hammond is very keen on them.
“I read them and I think, that’s actually the way I live my life. You do want to be aggressive, you do want to win and be fair; that rather epitomises the company.” Indeed, the Lockton values are so important to the firm that, at last year’s Christmas party, it offered a case of champagne to any employee who could recite them off by heart.
It’s a different culture that brings to mind other American brokers – take Willis, with its legendary lapel badges and that motto “Bring it on”. But let’s be fair here; it seems to be working. Lockton is doing well, at least by its own measures, which are the only ones available because the public lack of figures. In the midst of recession, it has shed 15% of its staff and has still grown top-line revenue by 30% since 2006. It has won major accounts, including Asda and Bupa, and has opened new offices all over the shop. It has taken the lion’s share of the solicitors’ PI market, pissing off its rivals no end.
In fact, at the recent Insurance Times broker forum, one audience member complained that Lockton’s exclusive PI product, underwritten by Inter-Hannover, had pushed rates down and resulted in customers deserting their established brokers in droves. Perhaps there’s not much wrong with that and – being fair again – it does seem to embody the “values”.
Lockton International is doing well, and expects more of the same in 2010. Hammond rules out acquisitions: “The model for Lockton is very much about incremental steps; we’re not going to go and make a massive acquisition.” But one thing’s for sure: it will keep growing. So watch out for that famous aggression. IT