Expansion Has Challenges, Even For Lloyd's

Lloyd’s Chairman Lord Peter Levene is very interested in seeing expansion of global markets outside of the U.S., he told me yesterday during a chat at the Peabody, here in Orlando. That’s the hotel famous for ducks marching into and out of the lobby every day and frolicking in the hotel fountain.

Mr. Levene said the U.S. accounts for a huge 40 percent of Lloyd’s business and that while he would like to see business in the U.S. increase, he would also like to see it decrease as a percentage of Lloyd’s total business.

The U.S., he said, will always be the “bedrock” of Lloyd’s business because Lloyd’s is understood and “well regarded” here. After all, Lloyd’s has a history with the U.S., which has viewed it favorably. In the U.S. Lloyd’s wrote its first policy about 200 years ago and is well known for helping to build back San Francisco after the great fire. It also has gotten publicity for some quirky coverages over the years. Recently it insured “Ugly Betty’s” smile and in the past insured the ghost on the Queen Mary.

The original policy, which is part of a display at the Lloyd’s booth during the RIMS conference here, was to provide protection in case someone was frightened out of their wits at the sight of the ghost. I was also told that no claim was ever paid.

Mr. Levene said that while there has been a rush for companies to establish themselves in Brazil, Russia, India and China, not everything has panned out. “For me, Brazil and China are very important—Russia, who knows—and India is just stuck in the mire.” India, he went on to say, has “very old legislation,” which actually prevents Lloyd’s from operating locally in the country. “They’ve promised us ever since I’ve been at Lloyd’s it was going to be changed next week. I’ve just given up waiting,” he added, noting that he doesn’t expect to see the kind of progress needed there for 20 years. However, he said, having a presence in India doesn’t cost a fortune, “and maybe they’ll surprise us.” He added, “You win some, you lose some, but Brazil and China are where it’s going to be.”

It’s for these reasons that Lloyd’s is so encouraged by progress in Brazil, which Lloyd’s announced last week has grown 85 percent in the first year. The Brazilian government worked quickly to accommodate Lloyd’s, which is to Brazil’s advantage.

And Brazil, one of the most sophisticated countries in the world in many ways, it is not without its problems. One of them is security and safety for those doing business there. Kidnapping of executives has been a threat in Central and South America, now only heightened by the spate of ships and crews hijacked in Somalia. So while things can look to be very promising, as Mr. Levene observes, the reality is that nothing is without its risks.