John Nelson outlines 2012 priorities

As we start this new year, I have a great deal of optimism for Lloyd’s. 2011 was unquestionably a difficult year for the global insurance industry. But, arriving as I did in October after the terrible disasters in Japan, New Zealand and Australia and just before the floods in Thailand, I saw calm assurance and competence in dealing with these events.

I don’t need to tell you that market conditions are likely to remain difficult in 2012. The world economy is in a strange place. The stability of the financial system remains in question. There is little prospect of investment returns improving for some time, and we have no shortage of capital in the industry.

These economic conditions could mean that the insurance cycle may take more time to turn than in the past – so underwriting discipline remains a central challenge for 2012.

Another challenge which we are all anticipating is the need to achieve implementation of Solvency II by 1 January 2013, regardless of any delays by the European Commission. I know my arrival coincides with the last circuit of what has been a marathon effort by both the market and the Corporation. But we now arrive at the critical point, when we need to make considerable efforts to ensure we achieve successful implementation.

My third immediate priority for 2012 will be equally unsurprising – we need to accelerate progress on market modernisation.

But, as we deal with these immediate challenges, I want to work with the market to identify where we want to be in 2025. I want to build on the strengths I see here at Lloyd’s. Chief amongst them is the culture of loyalty, prudence and integrity which has created the tens of thousands of trusted relationships which are central to the Lloyd’s market. I want to see Lloyd’s extend these relationships and, in the long term, increase its international footprint.

A great deal has already been done to push Lloyd’s out into, for example, Singapore, China and Brazil – but I believe that pulling business in from these countries is as important as pushing Lloyd’s out to them. I was pleased to see the partnership between Catlin and China Re at the end of last year, which brought not just business but also people and capital to the market. I hope that during my tenure as Chairman we will see more investment – not only in China, which I visited last month, but also from other high growth economies. I would also like to see the Lloyd‘s market working more closely with the global distribution networks of the larger brokers. I believe there is more that we can do with the broking community to encourage them to bring business to Lloyd’s.

If we can do these things – and I believe we can – we can make London EC3 into the true worldwide hub for specialist insurance and reinsurance. We are in a strong starting position, but we should not be complacent. Fifty, even twenty years ago, there were few alternatives to Lloyd’s – now there are several and we must work harder than ever to remain the centre of worldwide specialist insurance. We will have to work with Government and regulators to encourage them to create the right infrastructure and regulatory environment to enable us to compete efficiently. I see that as an important part of my job.

There are tremendous opportunities for Lloyd’s over the next decade or two. I look forward to working closely with the Corporation, the market and the brokers to make the very most of them.

John Nelson
Chairman of Lloyd's