The ‘Special’ Relationship

The bond between the United States and the U.K. has been the subject of a significant amount of media comment in recent weeks on both sides of the Atlantic. Our long held “special” relationship seems to have been strained of late as our leaders have grappled with the ongoing fallout from the global recession and difficult diplomatic discussions. From a Lloyd’s perspective, our relationship with the United States has never been stronger. North America is by far our largest market, and despite enormous political and economic changes over the last year, we have not faltered in our commitment to one of our most important regions.

Our appetite for risk is as strong today as it was 321 years ago when merchants first gathered together to seek coverage for their ships. Our client list may be a little more diverse now but our role is still the same — to provide piece of mind and to enable businesses to go out and take calculated risks.

Our position as the leading insurance market remains unchallenged and our commitment to the United States is resolute. The ties that bind us remain as strong as ever. Our U.S. foundations were laid over a century ago, when our promise to pay all claims from the 1906 San Francisco earthquake cemented our reputation as the market that steps up to the plate and doesn’t waver on its obligations. It is a promise that has stood the test of time, as has our market.

Our commitment to the U.S. market is unquestionable, with recent movements underway to develop our relationships and presence. We recently hired Hank Watkins as our new North American president. He has more than 28 years experience in the insurance industry, as both an underwriter and broker, and understands the opportunities and challenges that the industry faces in today’s global marketplace.

Nothing is more challenging currently than the financial situation that we find ourselves in. But what we are currently facing is a banking crisis, not an insurance crisis. It would be foolish to pretend that the economic downturn has not had any impact on the insurance sector, but unlike the banks, the insurance industry is working normally, robust and ready to help society manage its risk, and Lloyd’s remains in extremely strong shape. In fact, we are benefiting from a flight to quality as insureds seek the security of the Lloyd’s platform and express the desire to spread their risks. For a syndicated market like Lloyd’s and for our cover holders — this is welcome news.

Lloyd’s security is its strength. We learnt important lessons about dealing with toxic assets in the 1990s — which now stand us in good stead — and we have transformed our own business since overhauling our risk management and market oversight. While we are not immune to the financial crisis, a number of commentators have suggested we are a relative safe haven in this storm, our ratings have remained stable compared to our peers, and we recently announced an interim profit of $2.2 billion.

Representing 41 percent of our total gross written premium in 2008, and being the second largest surplus lines insurer, the United States is our most important market. The range of common factors, including history, cultural proximity, language and business practices make our two markets the perfect fit, and we look forward to maintaining this special relationship we share.

Topics USA Excess Surplus Market Lloyd's