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Buyers Find Capacity, But No Bargains In London

The London market in general and Lloyd's in particular are in the proverbial catbird seat, with deep pockets of capacity and a reputation for stability drawing more business--tempered by a commitment to underwriting discipline and risk-based pricing.

By Caroline McDonald | Updated on May 10, 2009

As U.S. insurers and risk managers struggle to cope with the fallout from the various financial crises increasing their exposures while undermining growth and profitability, the London market in general and Lloyd’s in particular are in the proverbial catbird seat, with deep pockets of capacity and a reputation for stability drawing more business–tempered by a commitment to underwriting discipline and risk-based pricing, top London players say.

“The gratifying thing from our point of view is the extreme turnaround here. Lloyd’s condition now is the complete opposite of 20 years ago,” said Lloyd’s chairman, Lord Peter Levene, in an interview during the recent Risk and Insurance Management Society’s annual conference. “The most important thing…is that Lloyd’s for 320 years has had a reputation of stability and integrity. Now, Lloyd’s is regarded as the place where you have a guarantee” that all claims will be paid, even in the toughest of times.

Lord Levene added that Lloyd’s isn’t taking its position for granted and will continue insisting on underwriting discipline to maintain profitability. “We have to be careful that we don’t get complacent,” he said. “We have to maintain discipline. We have to ensure that people don’t start taking the sort of risks that we don’t want.”

He pointed out that although Rolf Tolle, underwriting performance director of the Lloyd’s Franchise Board, will retire at the end of the year, his successor, Tom Bolt, shares a similar underwriting philosophy, so there will be “effectively no change.”

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