Lord Levene hates the inefficiencies of the market and the volatile business cycles And with his reputation he will make sure change happens, Elliot Lane reports.
The chairman's office on the eleventh floor is famous for its glass wall. Previous incumbents have favoured the openness of the executive floorplan and one, Sir David Rowland, always kept his door open so staff could just pop in.During the dark days of the reconstruction and renewal plan, when Lloyd's was fighting for survival, it evoked an air of transparency.On approaching the office, now inhabited by Lord Levene of Portsoken, the blinds are drawn and the door closed. The office is lit by a number of standard lamps, with chintz print sofas, a mahogany desk and large television tuned into CNN. It is comfortable and incongruent at the same time; a drawing room lifted from rural England then dipped in aspic.Pugnacious, by definition, means given to fighting, combative, and quarrelsome.Peter Levene is a pugnacious man. On talking to few a people who have either worked with him or interviewed him, one refrain is repeated: "He doesn't suffer fools gladly." To be in his presence is uncomfortable, but it is soon clear what he is good at. He may not know much about Lloyd's but he is the right man for the chairman's job."Peter does everything that Nick (Prettejohn) hates doing. Giving speeches and then working a room of US senators, bankers and government officials, is what Nick detests. Peter loves it. Because Peter thrives on networking," said a Lloyd's insider.He is the consummate operator and fixer which is probably why Margaret Thatcher made Levene the head of the Canary Wharf Development to bash heads when she wanted London's East End reinvigorated to the Docklands development we know today.His other passion is his political career and connections. When talking about his time in government or his career's past glories is when he relaxes.One of his proudest moments in the past 18 months since taking up the chairmanship was the Chancellor of the Exchequer Gordon Brown's visit to Lloyd's in July 2003."I was over at the Treasury and I said to Gordon, why have you never been to Lloyd's? He replied, no one has ever asked me. So I invited him and Jon Snow turned up too."Simple. Job done.He was also a good friend to John Major and during his tenure was given the title adviser on efficiency and effectiveness between 1992-97. He hates inefficiency and spits out the adjective "pathetic" to describe the tradition of Lloyd's brokers wandering the streets of Leadenhall Market and Lime Street with bundles of paper under their arm.
Business processingSo did his years of experience in the Major government prepare him for the challenge? "Yes - it doesn't do any harm. We have just appointed a new head of business processing reform Iain Saville and I'm very much behind his work. I think the way the market operates at the moment is absurd. All these people staggering around the City carrying files is ridiculous."So what do you say to those who are reticient to change 314 years of tradition? "They have to be un-reticient. If they don't get their act together then they will find that they are overtaken by those who have done."The broker environment we have at the moment makes no sense."Lord Levene is adamant the premium cycle will be controlled and the days when underwriters faced enormous losses is now over."How we manage our underwriting discipline is very important. Coming into the industry from the outside, I saw that every few years the Lloyd's cycle goes into freefall and people lose their shirts."When you say to them 'how do you possibly get into this situation', they reply 'well everyone is in the same boat so its alright' - frankly I find this view ridiculous."However Rolf Tolle and his team on the franchise performance board get high praise."What we have to do is weed out those who are not going to be able to underwrite profitably."The exit of Dex and GoshawK's enforced run-off has meant a closer relationship with the FSA. Lord Levene has frequent "meetings and lunches with the FSA chairman" and in the case of GoshawK, Lloyd's and the FSA "decided to set a good example of our working together by coming to a joint decision."Over the years Lloyd's Council meetings have had a Machiavellian reputation where personal vendettas are settled more often than Lloyd's problems are corrected.No longer. Lord Levene has fixed that and the council functions more like a company boardroom."The council is now more akin to a supervisory board. It meets once a month - the culture that everyone is glad to see the back of, is where the members feel they are part of various pressure groups who must get their point across."I made it clear that the old style council is not what I want. It now acts more like an executive board you would find in any company."Outside the membership of council they all have their own businesses. So I said if you have an issue you want to raise, come to me directly. The council is there is help the whole corporation together with the franchise board to run a profitable business. If they are there to score points, it just won't work."
Compensation cultureIn the past 18 months he has made several speeches on the subject of escalating claims costs driven by the compensation culture. He "makes no excuses for repeating it several times" because he believes there is a "danger" the UK could follow the route of the US.Eventually Lloyd's will be run more efficiently, similar in style to the back office operations of the world banking community and the stock exchange, he says. His message to the market is that Lloyd's will "consolidate the good results of the past few years and build our selves up for when the market is more difficult".Does he feel lucky to be chairman during these good times? "It has nothing to do with luck."It is difficult not to believe him, and pity those who do disagree with him.
LORD LEVENE ON:Why he spends so much time in the US: "It is about 40% of our business. It's hardly surprising that I spend so much time in our biggest market"Capital providers: "Some will move out, but then some will move in. Everyone moans about Bermuda, but it is is one of Lloyd's largest investors"Lloyd's cycle: "Everyone has this attitude that at the bottom of the cycle, we all lose money, so let's join the club - it's mind-boggling"China: "It's a big place. Why wouldn't we want to do business there?"Football: "As a life-long Chelsea supporter, the greatest footballer is Gianfranco Zola. I wish he would come back - we miss him".