August 29th, 2012

Guy Carpenter on Lloyd’s: A Vision for Targeted Growth, Executive Summary

Posted at 1:00 AM ET

Guy Carpenter is publishing its Lloyd’s of London report, Lloyd’s: A Vision for Targeted Growth, at a pivotal and exciting point in the Market’s evolution. Throughout its nearly 325 years of existence, Lloyd’s has endured many challenges to evolve into the
dynamic marketplace it has become today. Lloyd’s not only enjoys a solid brand and is a preferred market for many insurers around the globe, but its financial strength can be a key differentiator for future growth. In the current environment, Lloyd’s - as the rest of the (re)insurance sector - faces the prospect of subdued growth in established markets. As Lloyd’s looks to the future and aims to expand its platform to better service international clients, it has developed a new strategy that will address slower economic growth in developed markets, uncertainty over the future of the Eurozone and low investment returns.

In order to maintain its competitive advantages and improve its current access to business, Lloyd’s recently announced a long-term strategy that will further expand its reach into emerging markets. Through its ‘Vision 2025′ plan, Lloyd’s intends to consolidate its presence in established markets while leveraging its existing structure and strengths to facilitate rapid, yet targeted growth across diverse emerging economies. This move will help the Market facilitate a more diversified capital base and promote disciplined international expansion within its underwriting community. The Lloyd’s Vision 2025 initiative mirrors the shift in growth strategies observed across the wider (re)insurance sector. By penetrating regions such as Southeast Asia, Eastern Europe and Latin America, Lloyd’s goal is to become the global hub for specialist insurance and reinsurance.

Lloyd’s will face many challenges in coming years. Its pursuit of growth opportunities in new markets carries potential risks, particularly at a time of financial volatility. Moreover, competition in the (re)insurance sector is increasing as alternative
platforms grow in stature. In the past, Lloyd’s has dealt well with competition from regional hubs, but with traditional capacity providers increasingly investing in non-Lloyd’s operations and accessing alternative platforms, the Market will have to maintain its competitiveness by continuing to expand its global reach. The protracted implementation of Solvency II continues to add uncertainty and may reduce competitiveness and profits in the short to medium-term as insurers adjust their structures to comply with new capital adequacy levels that are yet to be confirmed.

Despite these challenges, Guy Carpenter welcomes the strategic plans outlined by Lloyd’s, which mirror our own values of leveraging global resources to solve clients’ local problems, wherever they may be. Lloyd’s will be able to deploy its strong
management of risk to the benefit of emerging market clients while consolidating its more traditional regional focus by writing an increasingly diverse business mix and attracting capital investment from around the globe. These developments will
ultimately benefit the global (re)insurance industry and its clients as a whole.

Click here to read Guy Carpenter’s full report: Lloyd’s: A Vision for Targeted Growth >>

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