We won’t "languish" at Lloyd’s like our competitors
We won’t “languish” at Lloyd’s like our competitors | Insurance Business America
Insurance News
We won’t “languish” at Lloyd’s like our competitors
CEO believes boom-ready Lloyd’s is “ripe for a new upstart”
Insurance News
By
Jen Frost
Novatae Risk Group (Novatae) will not repeat the mistakes of US rivals that have failed to make the most of Lloyd’s market broker buys, the wholesale broking group’s chief executive has set out.
“A lot of people do go down [the Lloyd’s] route but sometimes it doesn’t work so well, and it just seems to languish,” Novatae CEO Richard Kerr told IBA. “A lot of that is because they don’t really understand that market, you can’t just open up and expect everything to start happening.”
Novatae, World Insurance Associate’s (World Insurance’s) consolidated wholesale broker and managing general agent (MGA), made its Lloyd’s play in March. The Goldman Sachs and Charlesbank-backed business purchased London-based Bretton Woods International (BWI) for an undisclosed sum.
It’s been just over a month and things are already “exploding”, according to the chief exec, who took the helm at Novatae following its 2022 acquisition of Dallas, Texas-headquartered Marketscout.
Kerr pointed to new coverholder facilities, displaced teams that have expressed interest in joining the business, and more deals with historic broker partners. And, Kerr said, onlookers should expect more action to follow.
“Sometimes people do these things and they just don’t give it the love and attention that it needs,” Kerr said. “You spend $100 million on buying a Lloyd’s broker, now you need to spend $200 million giving them the tools and the people and the strength that they need, so that’s where we will really be able to excel.”
Pictured: Lloyd’s underwriting room
“You plant a flower, you’ve got to add a little fertilizer, you’ve got to give it some love back, get some water on it, pay attention to it, and it’s going to grow and be really beautiful,” Kerr said. “You can’t just plant it and walk off, and that’s where some of the mistakes are being made.”
Which US brokers have bought at Lloyd’s?
The 2020s have seen a flurry of US brokers snapping up Lloyd’s businesses. Among these:
Brown & Brown
Acquisition: Ovations Insurance Solutions, The O’Connor Group
Dates: April and May 2021
BRP Group
Acquisition: Prospect Brokers
Date: January 2022
The Hilb Group
Acquisition: WDB
Date: March 2022
Truist Insurance Holdings
Acquisition: Wellington Risk Holdings, Inc.
Date: October 2020
Risk Strategies
Acquisition: Oxford Insurance Brokers
Date: July 2021
A Lloyd’s broker was always part of the Novatae plan – Kerr
The wholesale broker and MGA already has pre-existing relationships with London firms and acts as a Lloyd’s coverholder. Existing Lloyd’s broker relationships “won’t necessarily end” due to the BWI buy, Kerr noted.
“We have a lot of great friends and a lot of great talent there, so we’ll continue with that – but it gives us a stronger foothold to do other new deals in the future,” Kerr said.
It was always part of the Novatae plan to launch a Lloyd’s broker, according to Kerr. The CEO is bullish on Lloyd’s future and has been for some time.
A “nice” set of 2023 results has helped. Lloyd’s reported underwriting profit of $5.9 billion and a combined ratio of 84% for the year, its best result since 2007 and a far cry from the losses that dogged it in the late 2010s and into 2020.
10 years of Lloyd’s underwriting results
Lloyd’s has seen consistent improvement in its underwriting results in the 2020s:
Year
Underwriting profit/(loss)
Combined Ratio
2014
£3.2 billion
88.1%
2015
£2.1 billion
90%
2016
£500 million
97.9%
2017
(£3.4 billion)
114%
2018
(£1 billion)
104.5%
2019
(£300 million)
102.1%
2020
(£900 million)
110.3%
2021
£2.3 billion
93.5%
2022
£2.6 billion
91.4%
2023
£5.9 billion
84%
Lloyd’s has a US excess & surplus (E&S) market share of around 18%, as per Fitch.
Kerr is backing it for a growth surge over the next two to three years. His prediction comes as clients of US insurers and brokers contend with challenges including social inflation and the influence of natural catastrophes on a hard property market.
“The Lloyd’s market is about to come back in a big way,” Kerr said. “There’s so much underwriting talent and expertise in that market that hasn’t really been capitalized upon, and as things get a little more dicey and complicated, it’s going to be more and more important.”
Got a view on Novatae CEO Richard Kerr’s Lloyd’s plans and how well US insurance brokers have performed in their bids to branch out? Leave a comment below.
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