Lloyd's is full of colourful characters. A chequered past is almost an entry requirement. And James Truscott, the man who has just reasserted himself at the helm of underwriting to broking phenomenon Euclidian, is no exception. He wears his badges of dishonour with pride. He is in no doubt that he has been a rogue. “If you actually get thrown out of public school you are a pretty nasty character and you have definitely gone off the rails,” he says. And he is talking about himself.

Truscott has matured since those days. He has been one of the most innovative players in the insurance market. Over the past decade, Truscott has been keeping busy. “I was involved in a management buy-out when I wasn't a director. I've done a management buy-in, I've set up a DTI-approved mutual insurer, I've organised a placement for a £20m company, brought the broking firm into it, started an underwriting company and taken the whole lot private again,” he says by way of summary. So where did Truscott come from?

Truscott's father was with the British Army of the Rhine when the young Jamie was born in Hannover on New Year's Day 1957, the brother of two sisters. The family returned to the UK a year later, and his father soon moved into insurance broking. Young Jamie went to Aberdour prep school in Surrey, an experience he didn't cherish. “It's named after an island in Scotland and we had to wear kilts. Can you imagine it? Having to cycle past the post office wearing a kilt?” Truscott asks with incredulity.

It didn't get any better for him. He went to Dauntsey's school in Wiltshire, but a series of incidents resulted in the anarchistic Truscott finally being expelled. He was then sent to “The Mill” (officially called West Down Tutors, of

Littlehampton), a “crammer” school, as he describes it, for people of his ilk. The totally different ethos of the school worked for Truscott. “They didn't say you had to be at lessons. They told you when the lessons were and it was up to you whether or not you went. With nothing to rebel against, I decided to go,” he says. He ended up as head boy, which he admits only meant he was the best of a bad bunch.

At 17, he left. “I wanted to earn some money,” was his rationale. London's streets, he had heard were paved with gold, but his early experiences were hardly the fairytale for which he had yearned. His father, then underwriting, put him in touch with a few people and eventually, Truscott found himself a job – a job he despised. “I went to see Len Keeley of Bland Payne, who I had met through the old man. He gave me a job and I started in aviation broking. I had to do the wordings and the claims processing. I did all the boring nitty-gritty stuff,” he says.

Off to see the world

A year was as much as the precocious Truscott could stand. His best friend had had the bright idea of joining the merchant navy and seeing the world. And going west was exactly what was on the young man's mind too. The pair of them saw Canada and the US and played at being Dennis Hopper or Marlon Brando by cruising around California on a Harley Davidson 1200 sport. Until they went bust. “We didn't have enough money to put petrol in the motorbike,” he says.

The pair had recently met a bunch of locals who liked to play that traditional English game of darts, and when the pair didn't turn up at the pub one evening, their US friends jumped in the car and came looking for them. They eventually gave the pair a lift to the pub in the car, bought them drinks and offered them work in their small but growing construction business. “We did the ditch digging and the hulking,” says Truscott. And he did it without a Green Card.

It was the motorbike that ended it all, with Truscott breaking his leg and being forced to return home.

But that wasn't quite the end of the US connection. While skint in the US, Truscott had taken to donning his suit, which he had rolled up in his rucksack, and calling up US aviation underwriters, pretending he still worked as broker and suggesting that as he was over in the neighbourhood, they should meet.

This always resulted in him being invited for lunch, which, being broke rather than being a broker, was exactly his intention. The trouble came when he returned to working in London with broking firm Stuart Wrightson (which later became part of Willis). One of the people he had conned into buying him lunch in the US worked for Stuart Smith, which – Truscott had been blissfully unaware – was part of the same firm. It didn't take long before he was suddenly confronted by his lunch host, who recognised the fraudster immediately. “We had such a giggle about it,” says Truscott. “I said I was sorry but I had to eat.”

Stressed out

Truscott spent just a couple of years with Stuart Wrightson, dealing in what he calls “the arse-end of aviation”, covering crop-dusters in Alaska. Then Bowring asked him to look after its bigger clients, and three years after that he switched again to Willis Faber, placing airline business worldwide. His least favourite was Burma Air as it crashed a plane so often it was the only airline that actually had measurable death statistics. “You had more than a 1% chance of dying on a Burma aircraft,” he says. But with planes going down so regularly, calculating the premium was easy. “It was the cost of one plane plus a bit,” he says, “because they always lost a plane.” The unnerving part was that it was seen as polite to fly in to secure the business on a plane owned by the firm you broked for. “You had to fly the flag in as a courtesy, so you didn't go too often,” he says.

The international jetset life was proving too much for him. “I was stressed out and tired out and an underwriter suggested I knew so much about the industry that I try underwriting,” he says. Three weeks later he was offered a job underwriting for Merrett's, where he stayed until the firm collapsed. Truscott insists he played no part in its downfall, writing profitable business the whole time.

He had, in the meantime, got married. Truscott had finished the January renewals in 1989 and shot off to Lanzarote for a week's R&R with a pal. They met a nurse on holiday at the time, one evening in a bar, and they both took her number. “I waited a week or so in case my mate was going to call her,” Truscott says. When he didn't call, Truscott made his move and they were married in October that year.

After the Merrett's fallout, Truscott was offered a job back with Willis but had a taste for more than just broking. “I didn't want to go back. I'd seen more. I'd seen a glimpse of the why, of the finer points,” he says. Instead he accepted a job with Steel Burrill Jones (SBJ) underwriting stop loss policies for Lloyd's Names to limit their losses in the event of disaster striking, which it was just about to do. “The 1989 results were looming because we were in 1991. The underwriters who had written the stop loss policies up to then were going to get killed,” he says.

Truscott reckoned the underwriting had been too subjective, and that had caught everyone out. He had to think of a different way of working. “There was no underwriting logic behind it. So I wrapped my head in a towel and thought about it,” Truscott says. He worked closely with long-time colleague and now Euclidian group managing director Jamie Stuart. Instead of rating

syndicates, Truscott looked at the lines of business and simplified that down to a manageable number of categories. He then looked at the business plans, published that year for the first time within Lloyd's, and calculated the probability of each line of business making a profit. He then analysed each syndicate and worked out whether each would do better or worse than average for the lines of business it wrote. The final score gave him a basis for underwriting risks.


He took this underwriting philosophy to Centre Solutions in Bermuda and asked for reinsurance on the basis of the underwriting theory. “We said we were going to run it through a mutual insurer that we hadn't set up. We had no company and we didn't even have a board in mind,” he remembers. But Centre liked what it saw and agreed the reinsurance. “Michael Payne (underwriter at successful liability syndicate 386) and Alan Jackson, the then deputy chairman of Lloyd's, said they would be chairman and deputy chairman, and after nine months the DTI said OK and we set up Integer,” Truscott explains.

The deal really was revolutionary. “It was alternative risk transfer (ART), then called finite reinsurance. We were lucky enough to know about it and understand it,” Truscott says. In effect they had been able to use ART to create a gearing model for corporate capital, enabling them to increase the £1:£2 underwriting ratio limit placed by Lloyd's to £1:£4 with insurance for any losses.

With all this going on, Truscott had found time to help organise the management buy-out of SBJ, putting himself in the owner's chair. But it was the stock exchange placement that created Euclidian that was the most pleasing thing Tuscott has done, even if it was the most nerve-wracking. In effect, Truscott and his colleagues were bought lunch by the whole City, not just one gullible US aviation underwriter. “We formed a £200 company and added an idea. We then went to the Stock Market and suddenly we had £20m,” Truscott says.

He admits, however, that it wasn't quite as simple as that. He needed to raise the whole £20m or the deal would collapse. He knew there were £230,000 of costs to shut down the project, because the lawyers, accountants and other advisers all had bills outstanding, and he had a house worth, after the mortgage, just £16,000. The rogue in him was still there. Luckily for Euclidian, Sir Lawrie Magnus got involved. “He decided it wasn't going to fail and stayed up all night convincing the City to back us,” says Truscott. “It was bloody close,” he says. But when the news came through that the target had been reached, it was the best night of his life.


It wasn't enough, however, and Truscott had his sights on managing his own underwriting business. Truscott remembers being rebuffed by the Marlborough managing agency when he had the cheek to offer £600,000 for it lock, stock and barrel. It sold soon afterwards for £6m. Truscott decided he couldn't afford that much so he set up his own firm. “For £62,500 and a bit of hard work, we launched our own managing agency,” he says. It wrote £20m across three lines of business – speciality, contingency and general liability – in its first year. He promises that figures out this year under the Lloyd's three-year accounting system will show it made a profit too. And he says the fact that Euclidian's broking business placed a significant chunk of business with it is no shame. “That's some of the most profitable business.”

Truscott has little time for anything else other than work, but he has three children, two boys aged ten and eight and a daughter of five, and lives in Pulborough in Sussex. Three years ago he took up boating and has a weekender motor boat. He says he is also a keen shot.

But what he's keenest on is innovation in business. It is unlikely we have heard the last of him. Truscott is one of many examples of the Lloyd's fairytale that involves turning rogues to riches.