Lloyd’s chairman plays down Brexit challenges
LLOYD’S of London chairman John Nelson says insurance market veterans view the challenges thrown up by Brexit as a “walk in the park” compared to the difficulties that nearly obliterated the business just decades ago.
His comments come days before the marketplace reveals its preferred location for an EU subsidiary, tipped to be Luxembourg, in a move that will ensure access to the bloc’s single market after Brexit.
Mr Nelson said that Britain’s pending divorce from the EU is undoubtedly serious, but that Lloyd’s is in a much stronger position to shoulder any related stress.
“If you go back in history and talk to some of the people who have been working here – I’ve only been working here at Lloyd’s for six years – but for 40 years, they’d regard this as probably a bit of a walk in the park compared to a few years ago, when Lloyd’s very nearly went bust, when it was almost out of business for reputational reasons.”
Lloyd’s struggled as asbestos compensation demands grew throughout the 1980s and 1990s, which had a major impact on “Names” – private investors who provided capital in hopes of returns on their investment under terms of unlimited liability.
Many suffered losses, even bankruptcy, and claimed they were knowingly dumped with extra risk.
“These are serious challenges but at least we’re in a strong position,” Mr Nelson said.
It is understood that Luxembourg – which has already clinched subsidiary commitments from insurance giant AIG – is the frontrunner in its search for Lloyd’s’ new EU hub.
But Mr Nelson said Lloyd’s has yet to make a firm decision, and that “there’s still more than one country in the frame”. The board will make a decision on Wednesday – the same day the Government triggers Article 50 – with plans to publicly reveal its choice by Thursday.
“There’s been a lot of enthusiasm from a number of EU countries for Lloyd’s to come to their country,” Mr Nelson said, but assured that regulatory reputation will factor into the selection process.
“If you look at the way we operate in different parts of the world – in Singapore, in China – nobody would say that we’ve gone there with our hubs because it’s a light touch, light regulation regime. Quite the opposite.
“So anywhere we go, we want really good quality, firm regulation.”
The outgoing chairman, who will hand over the reins to Santander board member Bruce Carnegie-Brown at the end of May, said it was “a good time to have a change” in leadership.
His successor will have to push forward the industry’s modernisation drive, while battling tough market conditions, Mr Nelson said.
“The insurance sector has not changed as much as most other industries of the world over the past 20 years, it just hasn’t.
“But now, the pace of change is going to be quick, and we’ve got to keep up the momentum in adapting to that change, there is no question.”