Sax Riley: A Reluctant Reformer

International Editor

London

Sax Riley may not have been the flashiest of Lloyds chairmen ora high-profile figurehead for the market: he was notoriouslypress-shy and admitted he avoided the “fuss, pomp and circumstance”that goes with the job.

In an interview with National Underwriter earlier thisyear, Mr. Riley said he kept his private life private andrigorously avoided being interviewed by U.K. newspapers who wantedto take pictures of his home and know what books he liked to readand where he was educated.

“He was a very private person. He was a reluctant chairman ofLloyds,” said Tim Riddell, managing director of SOC Group, theLondon-based holding company that owns a Lloyds managing agency andmembers agency. “He became chairman, not for himself, but becausehe wanted to see the market reform and thrive.”

“He was very dedicated and wanted to do what was best forLloyds, but didnt always feel he had to do it with the greatestfanfare,” said a market source.

It was all too apparent when Mr. Riley became chairman inJanuary 2001 that the market was in need of reform when just fivemonths later, the market reported a loss of 1.065 billion for the1998 year of account. (Lloyds historically has issued its reportsand accounts three years in arrears.)

Although the market had undergone a major reconstruction andrenewal in 1996, further reforms were obviously needed to correctunderwriting practices. In a speech last year, Mr. Riley said theLloyds brand and reputation “can no longer sustain financialperformance which goes from profit to heart-attack every fiveyears.”

So he ushered in a radical program of reformsa major part ofwhich was to make Lloyds into a franchise that licenses Lloydsbusinesses and monitors their business plans and performance.

“I hope Ive made some mark on Lloyds with the reforms,” said Mr.Riley during the interview.

He emphasized that the true test of the reforms will becomeapparent when “the market turns in the next two, three or fouryears and Lloyds makes moneyand does better than its peergroup.”

“My main plea to the insurance industry is dont, for the nextfive years, do something stupid,” he said, explaining the dangersof a return to price competition. Five good years are needed inorder to assure “the industry will pull through.” Nobody knows whenthe next big hit will come and whether theres “enough petrol in thetank to survive it,” he added.

“Well have a couple of good years and then a lot of bad years,”he said, adding that such behavior in the past was propped up byhigh interest ratesa cushion that no longer exists.

“I think the conditions now are so much different than theyvebeen, certainly in my experience, even going back to the 1960s.People should be more sensible and circumspect.”

What were the highlights and low points of his career? Forhighlights, Mr. Riley pointed to his 30-plus years as a broker withSedgwick, which he chaired when it was sold to Marsh in 1998.

“We were all over the world and did some massive jobs,” he said,stating that “it was a good firm to be with.” He said Sedgwickperformed a lot of firsts, including developing nuclear insurance,finding insurance for all the big North Sea drilling rigs as wellas the channel tunnel, “a unique construction project.”

The low point of his career came with 9/11, he said. “Theres nodoubt that the World Trade Center was an excruciating situationboth on the emotional side because [of people in the market whodied], and also because we didnt know for a period of time whetherwe would survive,” Mr. Riley said.

“But the team at Lloyds kept their heads and the market ralliedaround and they produced. Im quite proud that they did that,” hesaid, noting that Lloyds demonstrated its resilience, strength andhas emerged financially stronger than many of its competitors.

“The worst moment of my life was making a speech when peoplewere killed,” he said, recalling the day when Lloyds marked thetragedy by ringing the Lutine bell. “Thats far, far worse thanstanding in front of shareholders and being beaten up withquestions by analysts. It was a very poignant moment in mylife.”

Commenting on his tenure at Lloyds, Mr. Riley said it was twoyears of intellectual stimulation, to put it mildly. “Convertingmyself from the chairman of a publicly quoted stock company intotrying to run a market was an education process. You either had tograsp the nettle or not.”

Mr. Riley grasped the nettle, but quietly.

Reproduced from National Underwriter Property &Casualty/Risk & Benefits Management Edition, August 4, 2003.Copyright 2003 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.