Thank you, Jonathan, both for your kind words and for the invitation to speak this evening. Occasionally, at an after dinner speech, if the speaker is skilled enough, a ripple of excitement will run through the room and the speaker can congratulate himself on having perfectly captured the imagination of the audience. If that happens over the next ten minutes, I will assume that it means Chelsea has scored and your mobile phones are on vibrate. In that case, I hope that someone will pass on the good news.
There are few events that would cause me to miss a Chelsea Champion’s League fixture, but this LIIBA event is important to me, so I was determined to be here tonight.
My primary aim in being here tonight is to thank you for your support over a difficult period. You will all be aware that last month we published excellent interim results - £1.3 billion in profit for the first half. This has been achieved in the midst of the deepest recession for a generation. LIIBA, in the first year of its new incarnation, has had a big challenge. 2009 has been dominated by the economic climate. The most common questions I have been asked are, how bad is it? How is insurance affected and is it over?
It would be wrong to say that insurance is unaffected by the recession, or that we are out of the woods yet. I know that many of you are worried that your customers will want to cut back on their insurance cover. But I suspect that a primary problem for us is not simply the loss of business– after all insurance, a non-discretionary product, traditionally holds up pretty well in times of depression, but is also a problem of reputation - that insurance is being contaminated by the widespread fury directed at the banking industry. A recent poll in the trade press found that 70% of brokers believe the crisis has had an adverse affect on the reputation of the insurance industry[i]. Over the past 12 months, I have seen it as my duty to dispel the myth that banking and insurance are the same. I have repeatedly sought to remind politicians, the media and the public that insurance is a distinct part of the financial services industry. Above all, that this is an industry which understands risk.
But what has counted for more than the speeches or interviews that I have made, is the hard cold fact of the results which show that the Lloyd’s Market is a profitable, well run business. Our clients frequently stay with us for years. These long-term relationships breed trust, and brokers, perhaps more than any other sector, are responsible for this. Many of you have a relationship with Lloyd’s that goes back decades, and feel a pride, not just in being a broker, but in being a Lloyd’s broker.
I am not complacent about this relationship. I know that you have a choice where you place your business. Lloyd’s must always work for you, through the quality of our underwriting, our levels of efficiency and the functioning of the Room. We are also aiming to make headway on our business process initiatives, particularly the introduction of the Lloyd’s Information Exchange – a way for different players in the market to pass information electronically. Our motivation for this innovation is the same as yours – simply to improve our customers’ experience of the Lloyd’s market.
Since I joined Lloyd’s 7 years ago, I have seen many changes. Some have been popular. Others have been more difficult. But the bottom line is that we are in a much stronger place to withstand this recession and move forward than we were back in 2002. Lloyd’s is moving in the right direction and I am hopeful that we will see further success. We will benefit from a “flight to quality” during this recession. Our credit rating remains strong and is better than most.
It is not just Lloyd’s and the insurance industry that I have wanted to defend over the last year, I have done my upmost to support the City of London. Today is Trafalgar day – an important anniversary for the Lloyd’s community, where we are steeped in memories of Nelson - the Lutine bell and the collection of memorabilia that we see every day in the Room. The 21st of October is a day to remember both the victory at Trafalgar and the death of Nelson. This year, we have heard rumours, of the death of capitalism, of the death of the City of London. But I think we are beginning to see that these rumours are without foundation.
Does the fate of London affect us? Of course. London has evolved into an excellent place to do business and its pre-eminence as a global financial centre affects the standing and reputation of our market, standing in the heart of the City. This is not jingo-ism. Although I will continue to maintain that the city is a cause for celebration in the UK, not a cause of shame, this city and New York are the world’s two pre-eminent global financial centres. The City has been crafted over centuries for people of different nationalities that share a desire to trade. John Julius Angerstein, one of my most illustrious predecessors was instrumental in transforming Lloyd’s into an international organisation whilst Nelson was still fighting his sea battles[ii]. We are continuing this tradition of global engagement today as we move into big emerging markets such as China.
Nelson possibly won the battle of Trafalgar before it even started, because he was the better strategist. I know that many of you are interested in our own, rather more humble strategy review. I cannot say too much about this yet, as the work is still ongoing and the final product won’t be agreed by the Board until early next year. But what I can say is that we have benefitted enormously from the extensive consultation process we have undertaken with the broker community, not only through LIIBA, but also via our individual meetings with broking firms. Three years ago, brokers were hardly mentioned in the strategic plan. That won’t happen this year. There is now a stronger sense of recognition of the people whom we see as our Lloyd’s sales force and their central role in the distribution of our products.
Ladies and gentlemen, although I am not yet willing to declare a sense of optimism for the wider economy, I am however, quietly confident about the future prospects of the insurance industry, and in particular, the performance of Lloyd’s. Over the years, we have withstood myriad threats – 9/11, Katrina, Eliot Spitzer. You have stuck with Lloyd’s through thick and thin and it seems appropriate on this Trafalgar day to say how much I value the loyalty you have shown Lloyd’s in this difficult year. I only hope that somewhere to the west of us, a team of 11 are conjuring the spirit of HMS Victory in the battle of Stamford Bridge!
[i] http://www.broking.co.uk/insurance-age/analysis/1187356/points-view
[ii] http://www.english-heritage.org.uk/server/show/nav.889/imageIndex/6
