The Intelligent Quarterly from the publishers of The Insurance Insider

Spring 2012

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London market participants reiterated their commitment to remaining disciplined throughout the soft market at a recent industry conference on "Keeping London Competitive", organised by The Insurance Insider in association with Xchanging.

Richard Ward In case any players should stray from this path, Lloyd's CEO Richard Ward warned the 250-strong Mansion House audience that the role of head of underwriting standards Tom Bolt had changed from being "Mr Motivator" to "The Enforcer".

Shareholders are also determined that the sector will put its excess capital to good use.

Jupiter Asset Management's Tony Nutt, one of the largest institutional shareholders in the Lloyd's sector, questioned the corporate obsession with growth. "It's much more about making money," he pointed out.

"Some of my very best investments are businesses that give it all back to shareholders as soon as possible."

Meanwhile, Catlin CEO and founder Stephen Catlin called for Lloyd's to close ranks against new entrants. "Think about the costs of entry to the club," he said.

Stephen Catlin Although he was not against fresh blood in the market, Catlin said now was not the right time to add new capacity. He warned that as new syndicates tried to muscle their way into the market they tended to have a "disproportionate effect" on pricing.

But a Solvency II-themed roundtable held at the conference agreed that the Lloyd's market was well ahead in its efforts to prepare for Solvency II.

Meanwhile, keynote speaker and Scor Group CEO Denis Kessler predicted that implementation of the new regime at the start of 2013 could bring an end to the soft market.

Denis Kessler Scor currently estimates that levels of capitalisation will have to rise by between 20 percent and 25 percent for life and non-life insurance, with catastrophe business particularly capital-intensive.

This is likely to drop straight down to the bottom lines of these companies, Kessler suggested. "I don't see how return on equity isn't going to decline by 20 percent by definition."