60 Seconds with…John Nelson
Thu 06 Sep 2012
John Nelson talks to lloyds.com about culture change in the City and his first year in the role.
John, this month you hosted your first City Dinner since becoming Lloyd’s Chairman, what’s changed since last year?
I attended last year’s City Dinner six weeks before I took up my role as Chairman. At that stage it was clear we were having an ‘annus horribilis’ in terms of natural catastrophes – the Thai and Australian floods, Japanese Tsunami and the New Zealand earthquakes, laced with a heavy dose of the Eurozone.
Since then, I’m pleased to say that Lloyd’s came through 2011 and the early part of 2012 in extremely robust shape - our capital is at record levels, our ratings have recently been re-affirmed at A+ and A and our reputation worldwide in as good a shape, as it has been for many years.
At the City Dinner you talked about the urgent need for financial institutions to change their business culture.
We’ve had some pretty bad examples of business culture in the last few months, with interest rate swap mis-selling, the Libor scandal, the PPI issue and excessive remuneration issues – financial services cannot go on like this. We need to fix the culture, remember we are here to serve industry and re-orientate our culture to the customers. There needs to be bravery - and determination - by boards to push through that change.
How can Lloyd’s best prepare for the future?
We need to attract more business from the high growth economies. To do this successfully, we will need to change our own culture - and become more diverse. To maximise our business relationships we need greater diversity of nationality in the underwriting market in London.
I would like to see insurers from China, India and Brazil, come here over the next decade and teach us about their risks, whilst learning how the market works and how Lloyd’s can be an asset to their insurance sectors back home.
Our mix of capital needs to diversify as well. Currently 80% of our capital is from the UK, the US and Bermuda. We need to diversify that base and bring in capital from the emerging high growth economies.
You are coming up to your first year in the job, what do you feel has been achieved?
Three points spring to mind. The first is that I have been incredibly encouraged by the striking degree of consensus around our Vision 2025 - to grow the Lloyd’s footprint into the emerging growth countries. The fact that its launch was noted by the insurance community and media in those high growth economies that we are trying to move into, is especially encouraging.
The second point, is the performance shown by the market in 2011. When I came in towards the end of the year I was impressed by the calmness with which both the market and the Corporation were facing the worst year ever - in terms of claims incurred from a string of major catastrophes. The fact that we were able to pay $20bn in claims whilst maintaining close to record levels of financial security is a great testament to this market.
And the third is the progress we are making in modernising the backroom processes. This is work in progress, but we must keep up the momentum this year and next.
Have you enjoyed your first year?
Pictures from the city dinner