Lord Levene looks forward to a new year at Lloyd's

Lord Levene is in a buoyant mood going into 2010. “While the whole world has been collapsing around our ears, we’ve been carrying on fine here,” he says. “We’re successfully weathering the worst recession in a generation.” So what lies in store for the insurance market? The Lloyd’s chairman would like more of the same, but also see developments in risk management issues.

Moving towards ethical capitalism

The most obvious examples tie in with the so-called “reset economy” of increased regulation, greater public distrust of business, more ethical capitalism and contrasting opportunities for growth between emerging and developed nations.

Lord Levene is particularly concerned about the regulatory reaction to the financial crisis, fearing that the increase in the top rate of personal income tax and clampdown on bankers’ bonuses could damage the competitiveness of Britain’s financial services industry.

“I understand all the anger about the bonuses. I get it. I know what the mood is out there,” he says. “But nevertheless, the end result of that is hammering businesses in this country; which is not right.”

Some commentators cite a growing rift between business and communities but Levene believes it can be healed. “Insurance is enviable in that, unlike some areas of financial services, it has a tangible sense of purpose at the end,” he says. “Every day, hundreds of brokers come into the room wanting all sorts of cover which allow businesses the security to grow and innovate.

“Lloyd’s is not unique in providing financial services that people need. We also need banks and accountants and lawyers. I don’t think that the public has lost sight of this, nor do I believe that capitalism is dead or that free market economics is redundant.”

Ethical capitalism is seen as part of the answer. Lloyd’s currently participates in community action initiatives in East London, while its China office also recently opened a school in an area that was lacking educational facilities.

"People want to do that sort of thing,” says Levene, “and that’s why I get angry with some of the rather silly comments about what’s happening in the City because someone’s got to generate the cash to be able to do this.”

Going global

The bigger picture is the changing world economy and Lloyd’s is well positioned in China, where Eric Gao has been appointed Lloyd’s China chief executive.

“We opened in Shanghai two years ago and it’s the market of the future,” says Levene. “If China is going to be the biggest economy in the world, we have to be there.

"If I had said ten years ago that China would be a bigger producer of cars than the US, you would never have believed it, but they’ve already done that. We have six syndicates in China now, and it’s building up. Singapore also started from a small base and we now have 17 syndicates and 158 people.”

Lloyd’s continued its global expansion in 2009, increasing its business in Brazil by 80% after being licensed as the first admitted reinsurer in the country, and opened its first office there. It has further expanded with an office in Ireland.

Future frontiers

So what’s next? “I would like to say India,” says Levene, “but it’s taking a while. We’re still restricted from entering but we’ve been promised it’s going to happen and we’re looking forward to it.”

He sees continued business expansion in the US, which accounts for 44% of Lloyd’s business and is glad Lloyd’s resisted pressure from some parts of the market to open up in Dubai.

Lloyd’s will announce the results of its strategic review in February, with Levene expecting it to outline a continuation of the kinds of policies that have underpinned the market’s recovery since his appointment as Chairman in 2002.

"It will show the next step forward, which will build on the work we’ve been doing over the last few years,” he says, “but if people are looking for something earth-shattering I think they will be disappointed. If it isn’t broke, don’t fix it.”

Tackling climate change

Globally, Levene remains convinced of the need to mitigate climate change and also forecasts an increased focus on energy security and resource scarcity, which, along with overall risk, are addressed by Lloyd’s 360 events.

"These are all issues on which we hope people will sit up and take notice,” he says. “Climate change is such a big issue now, particularly for the insurance industry. If you don’t get it right, you’re going to get more and more natural disasters occurring and we’re going to be the ones who have to pick up the tab. So we’ve got to be very much at the forefront of this.”

Looking ahead

Overall, however, he’s extremely optimistic about the remaining two years of his tenure as Lloyd’s chairman. “When I got here, Lloyd’s was a dirty word,” he says. “People didn’t want to say that they worked here. Now, it’s completely the opposite.

"The Corporation and the market are both very successful and people are proud of it. I want to keep Lloyd's in good shape and ensure that the progress we’ve made with the outside perception of the market and the corporation is as good as it is now. I want to make sure we keep the whole thing steady.”