Itochu builds insurance business at Lloyd's with Antares
Tue 19 Feb 2013
In January Antares Managing Agency entered a partnership with Itochu Corporation, the first Japanese non-insurance group to invest in the Lloyd’s market in London. Stephen Redmond, Managing Director of Antares explains why the deal is good for Itochu and the market.
What attracted Itochu to Lloyd's?
Lloyd’s is the global insurance and reinsurance market of choice and benefits from specialist underwriting knowledge. The market attracts business and offers underwriting capacity to risks from the vast majority of countries and territories worldwide. This level of geographic diversification and product range is simply not available for participation from any other insurance or reinsurance market anywhere in the world.
Are there any other strengths that make Lloyd’s attractive?
Lloyd’s worldwide reputation, it’s significant network of licenses, and the excellent security ratings ascribed to it by the leading ratings agencies, creates a framework of natural benefits for a prospective investor in the market. The regulatory environment and professional oversight of businesses operating at Lloyd’s by the Corporation of Lloyd’s, allows an overseas investor to draw comfort from the professional standards that a Managing Agent or Syndicate needs to adhere to.
What business is Itochu in?
Itochu has grown and evolved since it was established as a linen trading company by Chubei Itoh in 1858. The group, which is headquartered in Minato-ku, Tokyo; Masahiro Okafuji, is today one of the leading Japanese trading companies and has a wide array of interests in Japan and overseas, including textiles, machinery, metals, minerals, energy, chemicals, food, information and communications technology, realty, logistics, construction, finance and insurance.
What are Itochu’s plans at Lloyd’s?
Itochu owns Hong Kong-based Lloyd’s broker Cosmos Group but wanted to acquire insurance underwriting know-how and expertise to facilitate the full launch and expansion of its insurance underwriting business through strategic alliance with Antares.
Initially Itochu is providing financial support to Antares, which underwrites a wide range of insurance and reinsurance business through Lloyd’s syndicate 1274, and the two companies will seek to exchange knowledge and expertise. For example, starting in the spring of 2013, Itochu will send staff to work at Antares in London and gradually step up collaboration to jointly execute an overseas insurance business.
Is this the start of something potentially bigger?
Itochu’s business philosophy is to offer continuity and support over the long term. Initially the group would typically look to increase its knowledge of a business, and once it has become more familiar with the practices, processes and profitability of the business investment, it will look to participate in a progressive and meaningful way.
How did Itochu come to invest in the market and partner with Antares?
Antares and Itochu were able to build upon, and develop the relationship between their respective organisations that had existed for a number of years. Itochu believes that Antares is very well positioned to help it increase its technical knowledge of underwriting, and the secondment of Itochu personnel to Antares will facilitate this sharing of knowledge.
Was it a relatively simple process for Itochu to invest?
Lloyd’s was kept aware and was very supportive of the deployment of capital to support Antares. This was also a clear indication of one single example of a realisation of Lloyd’s Vision 2025, which highlights the need for the market to diversify further its financial and human capital to reflect the growing importance of markets Asia and Latin America.
How does the partnership benefit Antares and Lloyd’s?
Through the alliance Antares anticipates benefitting from new business underwriting opportunities from Itochu-related activities in Asia and emerging countries. This in turn benefits Lloyd’s through the diversification of capital transfer of human knowledge and growth from one of the world’s fastest growing regions.
Would you expect similar moves by other Asian investors into Lloyd’s?
As the leading global insurance and reinsurance market , it will be a natural transition for Asian operations to look to take an interest in the Lloyd’s market both now and in future years. This approach clearly and demonstrably aligns itself with Lloyd’s Vision 2025.