NU Online News Service, Oct. 17, 10:10 a.m.EDT

Lloyd's overtaking of American International Group Inc. (AIG) inU.S. surplus-lines premiums was not a product of the market'srecent campaign to convince brokers to see Lloyd's as a realalternative—for not just the strange, headline-grabbing risks.

“I'm not sure that you want to vault to number one in a softmarket,” says Hank Watkins, president of Lloyd's North America, inan interview from the National Association of Professional SurplusLines Offices (NAPSLO) convention in San Diego last week.

“It could imply that our syndicates are underwriting risk withlow terms,” he says. “That is not the case.”

The change in surplus-lines premium leadership has more to dowith AIG losing business, not Lloyd's gaining it. Others havenipped away at AIG.

No matter who holds the top spot, Lloyd's and AIG accounted formore than one-third of surplus-lines direct premiums in the U.S. in2010. AIG premiums declined 13 percent compared to 2009.

Watkins says he and several others from Lloyd's 35-employee U.S.operations met with numerous brokers at the NAPSLO convention tocontinue its public relations mission—convincing people thatLloyd's is actually “beautifully simple” and “not as complicated aspeople believe.”

Other than insuring wild risks including the body parts ofcelebrities and athletes, Watkins reminds us that Lloyd's was oneof the largest insurers of the World Trade Center and paid “a bigpart of the loss” related to the Deepwater Horizon oil rigdisaster.

The head of North American operations does not want to remindpotential Lloyd's users of its tremendous history.

“I want to avoid death by Power Point,” he says. “If you want toknow about it [the history], you can read plenty about it on ourwebsite. We just want you to consider us when you are looking tocover risk. It doesn't matter that Lloyd's started with ships 300years ago.”

Watkins continues, “We see more risks in a week than any carriersees in a month. Our syndicates are underwriters to the core. Theylove to take bets on risk and they are very smart about it. Ourmarket has been providing answers to unsolvable problems.”

Watkins says Lloyd's continues to conduct business with brokersface-to-face. He is aware of movements in some surplus segments toskip brokers but that is “not the future of Lloyd's,” Watkins says.Electronic exchanges are looking at commoditizing the business, headds.

“You need to know you can trust me—that I'm not going to bringgarbage to you,” Watkins says. “You know I'm going to bring yousomething you want to write. Those interactions andrelationships—that trust—comes with face-to-face meetings withbrokers.”

Pricing levels in surplus lines are not growing, but they are“staying put,” says Watkins, who identifies cyber risk andrenewable energy as two emerging opportunities for the surpluslines industry.