Good afternoon everyone.

It really is great to be here, as we mark an important milestone for Lloyd’s - holding our first Meet the Market here in Miami.

If you haven’t been to a Meet the Market event before, they are a really good opportunity to meet brokers and underwriters from the Lloyd’s market – and for us to meet you.

We hold these events all over the world and it is one of my favourite things to attend. Because we get to demonstrate the very special nature of Lloyd’s, and recreate the Lloyd’s Underwriting Room. That room is at the heart of what makes Lloyd’s unique. It is where brokers come to debate, discuss, and determine insurance terms face-to-face, with expert underwriters. It is a relationship built on trust and confidence, and has been central to our innovative approach for more than 300 years.

So I’m delighted to see so many of you here to find out more, including those who have travelled further afield than Brickell Avenue.

Today we are joined by some of our key business partners, including Lloyd’s brokers, underwriters and representatives from a number of Lloyd’s coverholders.

Our Meet the Market events are a great opportunity for representatives of the local market and the Lloyd’s market to meet, discuss opportunities, and do business with one another.

As we all know, Miami is a gateway to Latin America – a region that matters a great deal to Lloyd’s. So do take some time today to talk to everyone here.

Before we officially kick things off, I thought I would start by explaining a little more about Lloyd’s and the importance of this region to us, including what we can do to continue to support economic growth and development across Latin America. And I’ll also speak about the current market conditions and ways in which Lloyd’s is addressing those.

About Lloyd's
Some of you here may not be so familiar with Lloyd’s, so I have a little explaining to do –we are the only specialist insurance and reinsurance market in the world. We have a truly global reach, operating in more than 200 countries and territories worldwide. For almost 330 years we have been underwriting human progress; Lloyd’s syndicates insured the first cars; the first planes; and the first satellites. We pioneered business interruption, D&O, and earthquake insurance. Today we are leading the world on new risks like cyber or supply chain disruption.

The world’s largest insurance companies set up syndicates at Lloyd’s in order to write specialist insurance for the world’s largest companies. Today we are home to 57 insurance businesses - or managing agents as we call them. And between them they manage more than 80 syndicates.

Sometimes syndicates compete; sometimes they collaborate. And much of Lloyd's business works by subscription, where more than one syndicate takes a share of the same risk. This allows Lloyd’s to lead the world in covering large and complex risks.

And we are still a fully brokered market. Lloyd’s has no sales force as such and has outsourced distribution to brokers, who have been critical to Lloyd’s development over the centuries, bringing risks from all over the world to our market.

We also have another source of distribution where syndicates delegate underwriting authority to coverholders, who are also a very important part of our distribution arm. They understand their customers’ risks and needs.

The clustering of broking and underwriting expertise is what gives Lloyd’s our unique edge. If you ever find yourself in London, get in touch to arrange a visit to the Room in the Lloyd’s building – four floors of activity where brokers and underwriters conduct thousands of face-to-face transactions every day. It is this interaction that over hundreds of years has helped forge our reputation for innovation.

In the corporate centre of Lloyd’s, we are guardians of a special feature of the Lloyd’s market – a central mutual fund.

In order to protect this fund we approve all syndicate business plans and also set the level of capital that is required to back those business plans. Each member at Lloyd’s has to deposit a certain amount of capital as Funds at Lloyd’s – which means it can only be used to pay claims to Lloyd’s policyholders.

Syndicates also have to make a contribution each year to the central fund which is there to pay out if one of the syndicates doesn’t have enough capital to fulfil their policyholder liabilities.

This mutual aspect of the market makes Lloyd’s totally unique. It also provides the financial strength so desired by our customers. Our capital position remains strong, with our net resources totalling over $35.6 bn at the half year 2016. And all syndicates at Lloyd’s are backed by our excellent ratings – A+ from S&P, A from A.M. Best, and AA- from Fitch.

So that is a very brief overview of who we are, and how we work.

Latin America & Lloyd's
And we are absolutely committed to Latin America, to supporting the economic growth of the region, and its countries.

Emerging economies, including some of those in Latin America, have been growing at a faster rate than their Western counterparts. It is predicted that by 2030, the E7 economies1 – which include those of Mexico and Brazil - will be larger than those of the G72. Mexico’s economy could be larger than the UK’s in just 15 years.

Latin America’s GDP of $7.4 trillion already accounts for about 8.5% of global GDP, and by 2017 its real GDP growth rate is expected to surpass that of all other regions except, as a matter of fact, the Middle East and North Africa.

This growth is driven by local companies. According to Deloitte analysis4, over 70% of the revenue produced by the top 500 businesses in Latin America is generated by companies based in the region – not by large multinationals from other regions or international companies operating locally. This defies the popular myth that global multinationals are the dominant players in Latin America.

Despite the slowdown in economic growth during the last three years, the International Monetary Fund expects 2017 to be the year this reverses, with a forecast of 1.6% GDP growth.

And the underlying strength of local businesses, the talent within them – and hopefully strong political leadership – means the region has enormous potential and will continue to be an important player in the world economy.

However, some analysts believe that economic growth in the years ahead will depend on the ability of key markets in the region to address their economic imbalances and increase their investments in infrastructure. The UN estimates Latin America is still facing an annual infrastructure spend gap of around 6% of GDP.

This means the region is still lagging behind many other parts of the world in infrastructure areas, particularly in sanitation, telecoms, energy and transportation.

For Latin America to achieve sustainable growth, the proper infrastructure must be in place and the private sector needs to play a bigger role in these projects – and of course supported by insurance.

Latin America's underinsurance
But this is a region that has one of the lowest levels of insurance penetration in the world – non-life insurance penetration in Latin America is just 1.8%.

Underinsurance poses a serious threat to growth – not just in Latin America but in all growing economies around the world.

Lloyd’s own research found that there’s a global insurance gap of US$168 billion in premiums. That’s how much is needed to protect economies against their catastrophe exposures. In a study of the major 42 countries of the world, we found 17 were substantially underinsured.

While insurance penetration rates remain low, the burden falls on governments and businesses to fill the gap. This will become unsustainable as the costs of natural catastrophes increase.
And this is where we as an industry must step in. This is where reinsurers take the risks of natural catastrophes off the balance sheets of governments, taxpayers and businesses.

Lloyd’s research shows that a 1% rise in insurance penetration translates into a 13% reduction in uninsured losses, a 22% reduction in the taxpayers’ contribution following a disaster, and increased investment equivalent to of 2% of national GDP.

Let’s look at the recent Ecuador Earthquake in April – the worst to hit the South American country in decades. This disaster resulted in the tragic loss of life of more than 500 people and over 5,000 injured. Alongside the human cost, hundreds of buildings collapsed and key infrastructure was significantly damaged.

President Rafael Correa estimated that the damage could cost between USD$2-3bn and knock two or three points off the country's GDP7. And, in the worst case scenario of highest total damage, and lowest insurance loss, the gap could be as high as 89% - meaning just 11% of the damage is covered by insurance and reinsurance.

The result of this cavernous insurance penetration gap is that the cost is now largely falling on the taxpayer with the Ecuadorian Government having to temporarily increase some taxes, sell assets, and issue new bonds on the international market to fund the multi-billion dollar reconstruction.

If we look to a country like New Zealand, we see a completely different story. The government sees the value in international reinsurers supporting the industry. As a result, over half of New Zealand's USD$30bn of economic losses in 2011 following the destructive earthquake in Christchurch - were picked up by international insurers, which considerably reduced the economic impact on the country.

Protectionism is on the rise, including restricting international reinsurance placement, and this threatens the insurance industry in their ability to carry out their role in supporting global growth.

We have identified 30 major territories around the world – including countries in Latin America, which have either implemented, or are in the process of implementing, barriers to the transfer of risks through global reinsurance markets. In the end, these trade barriers reduce capacity, competition and customer choice and at the same time drive up reinsurance costs over the long-term.

So the industry must keep working to demonstrate why open insurance markets are so important.

What Lloyd's is doing to help grow the local market 
So – with that said, what are we, Lloyd’s, doing in Latin America - a substantial market for us already – what are we doing to help grow the local market?

Lloyd’s is a leading provider of reinsurance solutions for complex and specialist risks in Latin America and offers specialist cross-border insurance in specific markets.

The region generates for Lloyd’s about US$1.5bn in premium income, most of which is placed still on an offshore basis in London, but with a growing contribution from service companies in the region. These are mostly here in Miami but also in Chile.

And over the last five years9, Lloyd’s paid over $2.5bn in claims across Brazil, Chile, Colombia, Ecuador, Mexico and Peru.

We have a strong established presence in Brazil. We established our platform in Brazil in 2008 and it now has 10 Lloyd’s managing agents writing US$243m premium. In fact since we opened we have grown at a rate of 6% per year.

And in the past year we have expanded our footprint opening offices in Colombia and Mexico.

In 2015 we also welcomed our first Mexican re-insurance company, Patria Re, to the Lloyd’s platform.

And we are continuing to build on our business relationships and offer new capacity and specialist products to support the growth of the industry across the region.

Latin America is a dynamic region in the world for insurance industry growth. In fact McKinsey estimates that Asia and Latin America will represent 37% of the global P&C market in 2020 or 745 billion dollars. As cities expand across the region, so does the value of assets requiring protection and we see significant potential for development in specialist insurance and reinsurance.

We want Lloyd’s to be part of this development.

Market conditions
So now to some global industry trends, including a word on market conditions – whether you are an insurer or a broker, it’s tough at the moment.

Low interest rates are attracting new capital into insurance markets. Technology is allowing risks to be packaged up and commoditised, attracting this new capital and driving down prices. Insurers are cutting costs and changing their growth strategies.

Technology is also affecting brokers. Now customers can go direct to insurers, challenging distribution models. Broker facilities are becoming increasingly popular.

At the same time, businesses are finding themselves exposed to new threats such as cyber-attacks and new liabilities created by new technology. Just who is responsible for a driverless car crash?

All of these changes are taking place at a time when we are seeing a change in attitude towards globalisation, with both Brexit and Trump’s election based on a more protectionist approach, as I mentioned earlier.

Faced with difficult market conditions, Lloyd’s is working hard to make sure that the ways you access the Lloyd’s market are as efficient and as simple as they can be.

We’re committed to growing our coverholder model. It’s is an excellent way for us to offer local Lloyd’s policies to customers.

Local insurers benefit because by becoming a coverholder, they can partner with Lloyd’s syndicates and increase their portfolio by offering innovative Lloyd’s products. This helps grow the local insurance market.

And it means policyholders can access Lloyd’s products in their country, in local languages and with local services, backed by the extra security of Lloyd’s Central Fund – a mutual fund that sits behind all the policies we write and pays claims in the unlikely event your insurer can’t.

In Latin America around 5% of our binder business is placed through coverholders, and we want to grow and support these networks.

Looking to service companies - a significant proportion of this business is based here in Miami. In 2013 we had four service companies, and this has increased to 12.
We want to grow and support these networks and this Meet the Market is an important event to do this.

We are also helping businesses navigate the fast-changing risk landscape by providing insight into new and emerging risks – and by developing new products.

For example, last year, we created 15 new products for cyber insurance.

Lloyd’s is renowned for innovation, and through its reports on emerging risks, market intelligence and the combined expertise of the syndicates, Lloyd’s offers businesses in this region additional, bespoke coverage the local market does not have the capacity to offer.

Why Lloyd's 
So why work with Lloyd’s?

Lloyd’s is helping to grow the insurance market here, and across Latin America.

We support business growth at home and abroad. Through Lloyd’s multiple distribution channels you can access our underwriting expertise and knowledge in more than 200 territories across the world.

All our policies are backed by our Central Fund, which as I mentioned earlier, backs every insurance policy that is written by us. This is unique to Lloyd’s.

And we are investing in innovation and technology to make it easier for you to do business with us.

Thank you for joining us today and enjoy the networking.