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Insurance Insider - Behind the Headlines
Get the inside scoop on the major stories shaping the London Market through discussions with the journalists who broke them with insights from industry professionals on what these developments mean for the (re)insurance sector.
Insurance Insider - Behind the Headlines
Behind the Headlines: Lloyd’s chair Sir Charles Roxburgh on creating a preeminent market for the future
How does Lloyd’s plan to secure its future as a leading global marketplace?
Lloyd’s chair, Sir Charles Roxburgh, joined the market in May with a full in-tray—most notably, the task of appointing the next CEO. Now, with a fresh leadership team in place, he is working alongside CEO Patrick Tiernan to cement Lloyd’s position at the forefront of the insurance world.
Roxburgh told Behind the Headlines that he is leveraging decades of consulting experience and nearly nine years at the top of the Treasury to demonstrate to governments and regulators the vital role Lloyd’s plays in the global economy. Speaking at the Rendez-Vous de Septembre in Monte Carlo, he emphasized that Lloyd’s continues to champion innovation and must stay aligned with major economic shifts, including the rise of AI.
He also reflected on his work during the reconstruction and renewal process in the 1990s—a period he describes as a truly “existential crisis” for the market.
In this episode’s news discussion, Insurance Insider editor Fiona Robertson shares the key takeaways from the reinsurance conversations in Monte Carlo.
Hello and welcome to Behind the Headlines, brought to you by Insurance Insider. I'm Sam Casey and thanks for tuning in to the latest episode. Remember, you can subscribe to the podcast either on our website or on your podcast platform of choice. This week's episode wings its way to you from Monte Carlo, where I spoke with Sir Charles Roxbroth, the recently installed chairman of Lloyds. Sir Charles first encountered Lloyds back in the mid-90s when he was heavily involved in the reconstruction and renewal process as a consultant. After helping Lloyds back from the brink, he enjoyed a long career in consulting before moving on to the Treasury. All this gives him a well-rounded outside perspective of the specialty insurance market and its place within the wider economy. He explained to me his role in the strategy to make Lloyds a preeminent global insurance marketplace for the long term.
SPEAKER_02:And how can we make it happen? And that's not for the corporation to invent the new product because that happens in the marketplace. But how can the corporation create the environment and the supporting regulatory and the supporting oversight mechanisms that encourage that innovation to happen? So that's an important part of the next stage of our strategy.
SPEAKER_01:First to our fortnightly news discussion. I'm joined by Insurance Insider editor Fiona Robertson. Fiona, thanks for coming on again.
SPEAKER_00:Thanks for having me, Sam.
SPEAKER_01:Hector week for us always when we head down to the Rendezvous in Monte Carlo. First of all, could you just explain what it is that as journalists that we get up to there and why we make the effort to attend?
SPEAKER_00:Well, the Monte Carlo Conference is always very much about being seen to be seen, I think. So it's quite a media-centric conference. So we send a fairly big team from London. We're really on ground to do what everybody else is doing, reconnect with contacts, meet with people to try and find out what the chat of the market is, where the market's trending, and use those meetings to pull together our analysis and takes on what's going on in reinsurance.
SPEAKER_01:And based on all those meetings that you had, what was the, first off, the overall messaging on the market trajectory?
SPEAKER_00:I think it was fairly neutral. I think when both brokers and reinsurers seem generally okay with things, you know that the market might not be too destabilized. Unless we have any major shocks in the coming months ahead in terms of hurricane season activity, then I think the general trajectory is going to be downwards on the cat side. And despite casualty having really taken the spotlight last year, I think this year there was much more focus on cat risk, just because there's an awareness that that is where more re-insurers are looking to grow while they see that there is still generally well-rated risk available for them. But there's this concern around that appetite coinciding with demand slowing down a bit. And so where those growth opportunities come from, and what does that do to rates? So there's an awareness that rates will be trending down, and it's just going to be a question of how quickly and in what way. There was a lot of chat around frequency covers and aggregate risk and the expectation that some reinsurance buyers might be looking for different kinds of savings. Some might be more keen on rate, some might be more keen on switching up their structure. So I think it could be quite a kind of complicated task for the market and for us in the run up to one-one, assessing how things look because you might get change coming from quite a few different places in terms of structure, rate, all that kind of thing.
SPEAKER_01:One emerging theme we've seen happening kind of all year, and there was a bit more news on during the conference was in terms of capital structures and, in particular, big carriers looking to pursue kind of captive reinsurance type vehicles and Lloyds. Can you explain a bit what's going on there?
SPEAKER_00:Yes, so these vehicles have been tried out before, and essentially the idea is that an insurer who places a large reinsurance program might try to tie up a multi-year commitment from a specific investor partner to provide part of that reinsurance for them. And essentially what that allows them to do is then reduce the amount of limit that they're putting into the subscription market. So as that strategic partnership has been tied up, they should be able to put the pressure on pricing for the rest of the reinsurance market. And there might also be other ways that they can benefit. So it might be indirect access to a different kind of investment return than you might make as an insurer on your own balance sheet. That's the gist of the idea. And lately Lloyd's is seen as quite an attractive place to try and do these things because you get a lot of good capital leverage from the strength of the rating at Lloyd's. We reported during the conference that Allianz was working with Oak Tree, asset manager, on their version of this proposal. Earlier this year we saw Blackstone and AIG deal being done. So if you think ahead, I guess the idea is well, how many big reinsurance buyers could we see having these kind of vehicles that over the long term? And how much does that take out of the rest of the market in terms of limit? But the one thing I would say is maybe not to over-eg that idea because they're complicated structures and you know they take a while to develop. And in most cases, I think they really work best if you're a big reinsurance sedent with a diversified program, and not everybody's going to fit that profile.
SPEAKER_01:And in the run-up to the conference, we saw already two quite big MA deals. There was Sompo buying Aspen and then also Skywood and Apollo. Is there expectation that there's more to come on that front?
SPEAKER_00:Yes, definitely. I think probably very good timing for both of those transactions. It's always good when you can go to Monte Carlo and say, you know, this is what's happened instead of being on the receiving end of questions. So I'm sure that that was beneficial timing for both of those deals. And I think it definitely created more interest in carrier MA specifically, because I guess broker or MGA type MA has been seen as where there's more value to be gained for investors over the past few years. But we're getting to that point in the cycle where we talked about the slowdown in demand. Where do you get the growth from? So that means that the carriers are thinking about things in a different way. I think there's generally still an expectation that on the, you know, the more reinsurance specific deals might be quite a little bit trickier to get done than, say, a deal like Sompo Aspen, where you have hybrid insurance, reinsurance conglomerate. But I think everybody is just now waiting to see who pops up next.
SPEAKER_01:And was there much chatter about brokers? We've obviously seen Willis Re launching, suddenly building up ready to launch into the market, lots of speculation about who they're going to hire, how they're going to carve out their niche.
SPEAKER_00:Yes, sadly, it was one of those topics at Monte Carlo where there was a lot of chat, but not much concrete news in terms of who the next big hire for them might be. So we might just have to wait a bit longer to figure that out. But I do think that you can see that there's an impact on the reinsurance broking landscape. As you say, there's been a lot of challenges out there in the past few years trying to build up. It's not always easy, you know. I think there is an appetite to have more than just a big three reinsurance brokers, although we've got big four now. Uh, but can there be, you know, a dozen reinsurance brokers effectively operating, or do they will have to find their lane and pick to it a little bit more? So I think we'll see more competition over time, but it's definitely gonna create some winners and losers, I'd say. And I think in the meantime, obviously you get groups or people moving, and then that creates knock-on disruption for people who are staying or building up teams. And so we're gonna have a lot of traffic amongst all the different firms in the next few months, I would think.
SPEAKER_01:Well, Fiona, thanks for coming on and sharing your thoughts.
SPEAKER_00:You're welcome. Thank you.
SPEAKER_01:Sir Charles Roxborough became chairman of Lloyd's back in May. He joined with a bulging in tray, not least the task of choosing the corporation's next CEO. With a fresh leadership team now in place, Sir Charles is focused on the long-term strategy for Lloyd's and championing the marketplace globally. That is in part what brings him to Monaco for his first visit to the Rendezvous, where we are speaking today. I'm delighted to be joined by Charles now. Charles, thanks for coming on the show today. Delighted to be here. I understand this is your first time at the Monte Carlo Rendezvous. It's obviously a slightly strange and unique event. Uh, how have you found it so far?
SPEAKER_02:Uh it's just a great opportunity for me. I'm uh new in this role and I've met a lot of leaders in the industry, but this is an opportunity to reacquaint myself with some friends I've known for a long time in the industry and also meet an awful lot of new people that I haven't met before.
SPEAKER_01:And so I'm looking forward to it. And as you said, it's fairly new new days for you still in the role, about May time that you took over the position. How have you found it so far? Is it what you were expecting?
SPEAKER_02:I've really enjoyed it. It's been uh entirely as advertised, which is great. I'm delighted to be back working with the Lloyd's market again. And so far, I've found it really fascinating to see just the really strong shape of the market these days. It's um I mean, I worked with it 30 years ago and it's changed dramatically for the better, far more professional, far more successful. So it's really great to be back.
SPEAKER_01:And as you say, it's a return to the market to an extent back in the 90s. You were here in a very different guise and in a very different time for the market during the whole reconstruction and renewal process when you were working as a consultant. Can you just explain to me a bit more what it was like in those days, what your experience of the market was then and how it's changed when you go back through the Lloyd's building today?
SPEAKER_02:Those were very challenging times for the market. First started working with David Roland in uh 1991 on the task force report, and then David became the chair, and I worked with him on the business plan, and then David led this huge effort in which hundreds of people played important roles on the reconstruction and renewal process to sort of transform the market and uh get it in a position where it could settle all the liabilities and reconstruct itself so that it could trade through what was a very serious and uh very challenging time.
SPEAKER_01:Did it feel like almost an existential crisis at the time? That's how it's built.
SPEAKER_02:It absolutely was an existential crisis at the time, and it was uh David's extraordinary leadership and huge work by a whole cast of characters, lots of people were involved, the entire market had to really step up to make reconstruction happen, and the names action groups, who many of them had won in court and had strong legal claims, they had to uh settle, and so they had to show real leadership too. So it required everybody to really come together for the good of the market, and if they hadn't, then the market would not have survived that crisis. So it was a truly existential for the Lloyd's market, but it came together, and I think that sense of community and that sense of Lloyd's is a market of competing underwriting businesses, but it's also a community that does have a shared common purpose and a belief that Lloyd's really matters.
SPEAKER_01:Have you seen any um familiar faces wandering around who were in the thick of it back in those days?
SPEAKER_02:Yes, although um it's 30 years ago, so they're a little bit older, and that the leaders of the market at that time, some like David, have sadly passed away. But others that I keep in touch with, like Ron Sandler and Robert Hiskotts and Barry O'Brien and uh John Stace, and so I've seen all those folks recently. So there's sort of strong group of us that work together with David on that. And fast forward to today, how does the market look compared to then? It must be totally transformed. It is totally transformed for the better. The quality of the businesses in the market has been transformed. And so some of the businesses around today are familiar names from back then. I remember sort of the Hiscox and Beasley managing agencies were very strong 30 years ago, and they've been transformed in that period. But then the market itself, through the advent of corporate capital, which was the decision to bring in corporate capital, was made in the 93 business plan. And it was only because of that that the market was able to recapitalize itself with corporate capital after the crisis, that to see the quality of the global businesses that now have major interests and successful syndicates in Lloyd's, the quality of private capital backing those businesses, that has transformed the market for the good. But some things haven't changed. And I think that sense of a marketplace where its real edge comes from a sense of competing entities, but also a common sense of purpose in the Lloyd's market that gives it that special feeling. And that hasn't changed, and I hope it never does.
SPEAKER_01:People are competing but also collaborating at the same time, aren't they? Which is fairly unique. And in terms of your role as chairman, you said it fitted the job description. It's obviously the chairman position is can be slightly more amorphous, and there are so many different things you could do. How do you define what you want to achieve as chairman and where you you feel your strengths lie and where you can make a difference?
SPEAKER_02:I always thought when I describe my role as I make clear, it's a non-executive chairman role, and that's important. Patrick is the chief executive, and Patrick runs the corporation, he leads on all the sort of commercial issues, leads on building the team, developing the strategy, driving forward the role of the corporation in supporting the market. So Patrick is the chief executive. So my role is a non-executive role. And as you say, different chairs can play that in different ways. A very important part of my role is governance to make sure that the council is effective and does its job of oversight, challenge, support, encouragement, course corrections if we think uh things are off track. And so I take that role very seriously. I mean, the role of the council is enshrined in the act, is ultimately the council is responsible for the success of the Society of Lloyds. So that's an important part of it. I have um an important role in appointments. My first appointment was my most important, which was uh to lead the process to recommend to council that Patrick be appointed as the chief executive. So that was a Was that a difficult decision? It turned out that Patrick was the outstanding candidate, so it was a recommendation I was delighted to make to council, but we ran a proper process, and that was very important that we do run a proper process. I'd met Patrick once before, and I didn't know Patrick, and Patrick didn't know me, so it was really important that we had a process so that Patrick could learn about me and I could learn about him, and we looked at a number of strong candidates, and we decided that Patrick was clearly the outstanding candidate. So I was delighted at the end of my first week as chair to announce the appointment of the new chief executive. And then Patrick moved very quickly to put in place his new senior executive team. So that role of governance is important, appointments are important, and then I see I have a very important role in managing the multiple stakeholders that the Lloyd's market has, both internal within the market, uh the underwriting businesses and the members' agents and the brokers, the very important Lloyd's brokers, but also in events like this, the global insurance uh leadership. And so that's on the commercial side, those important stakeholders, but also government relations are really important. And so both with the UK government and with the UK regulars, but internationally too. So I've been to Australia, I've been to New York, so I've seen the regulators there, and I'll big part of my role is to maintain those senior relationships with governments and regulators.
SPEAKER_01:Because if we look at the trajectory of your career, you were for many years a consultant with McKinsey, and then you went into the Treasury as a civil servant with a financial services brief in an interesting time with COVID, especially. In that position where your oversight and was the whole financial services sector as well as just insurance, how do you feel insurance fits in in terms of that wider UK economy? Is it viewed as uh a big important plank of it?
SPEAKER_02:It is now, but it was not. Uh, when I joined the Treasury in 2013, I was what's called the Director General of Financial Services, and I was working with George Osborne as the Chancellor to complete the process of legislating the changes after the financial crisis. And the focus very much then was on this was from the period 2013 to 2016, and then we had the Brexit and things changed after that. But for that first period, the focus was on the new legislation and the re-regulation of the banking industry. And insurance, we didn't get much airtime in government. And the city was seen as the banking problem. Um, now the banks have done a good job to kind of the 2008 bankers, that cap bases sort of and all of that overhang, and I think the bank industry has done a great job as all stepping up, and it's now much better capitalized, better conduct, better regulated. So the bank industry has done a good job of clawing its way back from the crisis. But insurance rather got caught in the shadow of that, and insurance didn't really get much airtime in government. I am really pleased that under this government, under Rachel Reeves as Chancellor, insurance is getting its rightful degree of prominence as a really important part. Well, Lloyd's and the London market are really important to the world economy because we help ensure the things that make the world economy work, but we're really important to the UK, and insurance is the largest employer in London. 40% of the City of London work in insurance, and uh we contribute uh 30% of the city's GDP. So it's a really important segment. And I'm really pleased that this Chancellor in the government's industrial strategy has recognised insurance and reinsurance markets as one of the frontier industries. And I think Britain can be and should be proud of the global success of Lloyd's in the London insurance market. Well, as you say, it's a global market.
SPEAKER_01:The London market obviously has ten schools across the world, and Lloyd's is licensing, is what's so important to some of the syndicates. Will you be engaging a lot with foreign governments as well in the role?
SPEAKER_02:Uh yes, and um Lloyd's is uh truly a global business. The US is approximately half our business, so the US is a critically important market, but we've got major strong positions in Canada and Australia, and our European business is a major business now. And we've got great opportunities to develop that further. So I a big part of my role is getting out and about, and um, I'll be going to the US later this year, you know, both at the national level and at the state level. Important to build those relationships.
SPEAKER_01:And with that US relationship, obviously, US politics is big news for a number of years, and there's a big agenda with this current government about protectionism. Is that something which you think about that has to be handled deftly or well?
SPEAKER_02:I think at any time, any uh commercial enterprise needs to treat its uh largest market with respect and invest heavily in building those relationships, and so that's no different now. Message I'll be stressing when I am in America and our American um partners, you know, the major American insurance companies and the major American brokers who are hugely supportive of Lloyd's and have major investments in London and in Lloyd's are completely aligned with us on this. The messages I want to stress are that Lloyd's is really important to the US economy. We're a critical source of insurance coverage of difficult, hard-to-insure risks in America, and that's really important to American businesses and communities. We paid out, I think,$13 billion worth of claims last year to American businesses and individuals when they needed the help most. We support the innovation in America. So Lloyd's has always been at the forefront of insuring new industries, and we're still doing that, whether it's you know, historically, you know, railroads and the space industry, but now AI and quantum and these new areas, these new energy areas too. So we're really at the forefront of that. So I think it's really important to stress that Lloyd's is an important source of strength to the US economy.
SPEAKER_01:And do you feel that the insurance market and Lloyd's, which has always prided itself on having a reputation for innovation in the sense it was the home of insurance and covering new risks? Do you feel that it's as a marketplace making the most of those new emerging opportunities, things like AI? Is it ahead of the curve or are there other global domiciles where we can learn something from?
SPEAKER_02:I've been really encouraged that Lloyd's, I think, really does still have that innovative edge. I mean, 30 years ago nobody knew what cyber insurance was, and it's great to see that Lloyd's now is a real leader in cyber insurance. I think it's very exciting some of the work some of the syndicates are doing, thinking about ways to ensure some of the new emerging AI risks. There's normally a story every week, and uh you'll find a live paper to cover the emerging AI risks, and I think that's really exciting, and that that's going to be a big area. And new forms of energy too. I think it's important that Lloyd's is at the forefront of ensuring the new energy infrastructure, just as we ensure the traditional energy infrastructure, too. So I think Lloyd's Lab is a fantastic innovation, and it's got a high success rate of uh the businesses graduating from Lloyd's Lab. So I think that's exciting. But there's more we can do, and I'm keen as part of the strategy work that Patrick is leading now and will be presenting to council over the coming months. I'm keen that we challenge ourselves to ask ourselves, well, yes, that's all good, but it's not enough. And if we want to be the world's pre-eminent marketplace in the 2030s and 2040s, we'll need to know what's next, what and how can we make it happen? And that's not for the corporation to invent the new product because that happens in the marketplace, but how can the corporation create the environment and the supporting regulatory and the supporting oversight mechanisms that encourage that innovation to happen? So that's an important part of the next stage of our strategy.
SPEAKER_01:Is there any specifics in terms of that goal which are which are underway at the moment?
SPEAKER_02:The place to look for the new innovations is where the action's happening in the real economy. So the transformational impact of AI is going to open up a whole new set of opportunities and risks. And so I think that's a rich area. But likewise, the world's climate is changing, that's creating new risks, and so finding ways to innovate to both protect communities from the changing climate, but also to ensure the new energy infrastructure, whether it's uh small modular reactors or nuclear fusion or large-scale batteries, whatever it is, those are going to require innovation to make sure that we can do it and enable our syndicates to underwrite those risks in ways that are profitable.
SPEAKER_01:Lloyd's is obviously headquartered in its iconic Richard Rogers building. You're you're up in one of the higher floors. Do you ever peer over and see how many people are up in the underwriting room? Does it feel like that physical hub is still a worthwhile thing to have in this modern digital era?
SPEAKER_02:I'm an unreconstructed fan of the building. I think it's one of the great works of art of not just a great work of architecture, but a work of art. I think it's a magnificent building. So I'm very excited about that. I try to walk through the underwriting room whenever I enter or leave the building. I mean, you can leave the building without going through the underwriting room, but I always try to walk through it when I'm entering or leaving the building. I get excited when I see it busy. Now, it's not busy every day at every day time of the day, but on underwriting hours, I'm really encouraged as to how busy it is. One of the things I've been doing in my early days as chair is getting out and about in the market, and I'm intending to do that throughout my time as chair. And I particularly want to meet some of the people starting out in their careers in insurance. So I've been asking them, you know, as they start out as an underwriter, how important is the underwriting room? And they love it. They really enjoy underwriting face-to-face with other underwriters, talking to the broker rather than just being emailed by the broker. I think there'll always be a role for face-to-face underwriting. And I think that's a special part of the marketplace, enabled by technology, with, and it's great that the underwriters sit there, but they've got some pretty impressive analytics and technology supporting their decisions. So I don't think it's an either-or. I think it's a definite yes, face-to-face underwriting, yes, an important role for the room, but ever more role for technology enabling that underwriting.
SPEAKER_01:And with your view of trying to meet up with younger people in the market, do you see part of the role as trying to attract young people or different people to work within the industry? Absolutely. Because lawyers are the icon of the insurance, which people would understand more.
SPEAKER_02:I often asked people how did you get into insurance? And a lot of people say, Well, I had no idea I was going to get into insurance. I didn't really think about insurance. And then I stumbled into it, and there's normally different reasons about how people stumbled into it. And then they say, and then I found out it was really interesting. It's an important, valuable industry. It does good things, it's got nice people, and it's a rewarding career, and I really enjoyed it, but I had no idea beforehand it was like that. So I think the insurance industry could do a much better job of selling itself. So I'm really encouraged by some of the things that, for instance, the London Market Group is doing about getting out to schools and uh getting uh students as they begin to think about their careers to get excited by the potential of what they could do in the insurance industry. And I think Lloyd's has got a great role to play in that, but also the wider London market has got a great role. And because we're such a big employer in London, and I think it's a great opportunity for us, but I think we can do a better job of selling what is actually a great career.
SPEAKER_01:Yeah. We talked earlier about how in insurers in Lloyds and London are quite good at collaborating amongst themselves with your broader financial services view. Do you think there's more the insurance industry can do to collaborate with other industries within the city?
SPEAKER_02:Well, it's an interesting point because uh there's been always for years to talk about the collision between capital markets and insurance, and should we be doing more with the banking industry? I mean, we do a lot with the banking industry, they advise a lot of these deals and um provide source of valuable advice. I think also the insurance industry, both underwriters and brokers are really upskilled. So you now get really sophisticated deal structuring advice from leading brokers, and that's an exciting development in that part of the industry. So um again, excited too when some of the world's leading investors are interested in Lloyd's. And so we've had some transactions recently where some of the world's leading investors are coming in and providing third-party capital in support of uh insurance really.
SPEAKER_01:They feel like votes of confidence from some of those names which have been um coming into the mob.
SPEAKER_02:I think one of the tests of are we achieving our strategy is to ask ourselves you know, are the world's most demanding purchasers of insurance? Do they want Lloyds on their cover? Can we meet their needs? Are the world's best brokers viewing Lloyds as critical to their strategies? Are the world's best insurance professionals committed to Lloyds? And are the world's most sophisticated investors? Can they see interesting opportunities to invest in Lloyds? And so I'm really excited that some are. And we've got some amazingly strong and important names of the investment world, but we want the capital to match the opportunity. We last thing we want is an excess of capital, but I think if we do it in the right way, we do have a great proposition for sophisticated investors.
SPEAKER_01:Well, on that note, Charles, it's been great to hear your thoughts. I really appreciate you coming on the show and um speaking again soon here.
SPEAKER_02:Well, thank you very much. Great to meet Sam and look forward to staying in touch in coming weeks and months.
SPEAKER_01:Before you go, here are some of the other top stories from the past fortnight. Insurance Insider revealed that Generale is the latest international insurer to be assessing a potential syndicate launch in Lloyds. The political violence market is facing its biggest Israeli loss in many years from a refinery bombing in June. And in reinsurance, Swiss Re warned that American litigation trends are spreading to Europe, which could prove a challenge for the casualty market. That's all we've got time for today, but we will be back again in two weeks' time.