Lloyd’s: pivotal to facilitating growth in LatAm
Lloyd’s remains central to the growth plans of many carriers targeting the Latin American region, a function epitomised by the role it plays at Miami Reinsurance Week. Dawn Miller, Commercial Director, and Hank Watkins, Regional director and President, Americas, Lloyd’s, spoke to Intelligent Insurer.
Miami Reinsurance Week is growing fast—and is starting to bear some similarity to other key industry events that developed organically, including the Monte Carlo Rendez-Vous and Baden-Baden. That is according to senior executives from Lloyd’s, who describe it as an invaluable opportunity to meet peers and clients in one place.
“Miami Reinsurance Week is growing, and I find it extraordinary that what started as an informal gathering is quickly gaining structure and more participants,” says Dawn Miller, Commercial Director, Lloyd’s, who attended this year.
“Everyone shows up in the same place with the same intent and interests. You walk up and down the street, everyone knows each other, they’re all talking about the same opportunities.”
Miller says some of the common threads are how the market can collectively grow—and how some aspects of operating in the region can be improved.
Lloyd’s hosts an event called Miami Meet the Market, which facilitates networking for some 700 people. Such events, now mainstays of the week, are helping to give the event structure.
“We see it as having given the market an anchor, which makes me really proud. We are seeing more people attend, and from more diverse groups. We are seeing vendors, people on the technology side, underwriters, brokers, cover holders, other interested parties. It was fascinating to attend this year,” Miller recalls.
Hank Watkins, Regional Director and President, Americas, Lloyd’s, adds that being in certain parts of Miami during the week, specifically Brickell Avenue, is similar to being on the streets around Lloyd’s in London. “You get brokers, underwriters, reinsurers, walking around doing business,” Watkins says.
He agrees that the Lloyd’s event during the week has become an anchor event, preceded by several days of frenzied meetings.
“It’s a fantastic week, and it gets better every year. Miami Reinsurance Week is growing. It’s the one opportunity for everyone doing business in Latin America and the Caribbean to convene,” he adds. “As many as 3,000 executives in total are now attending the week, and unspoken agreements mean that a growing number of events and other meetings are set apart to avoid scheduling conflicts.”
A reflection on wider opportunities
The growth of Miami Reinsurance Week is a reflection of a wider interest in doing business in Latin America, which Lloyd’s facilitates for many managing agents and carriers using its licences.
Lloyd’s business dealings across Latin America are mainly focused on the reinsurance side, assisting its members to write business in the region. The vagaries of different regulatory regimes across the region make this a preferred route for many companies, ones which are willing to acquire risk but without the infrastructure to consider complying with so many different regimes.
“We major on reinsurance in Latin America; that’s where we make the most impact,” Miller says. “We have operations on the ground in Brazil, Colombia and Mexico, which allow managing agents to operate. But our reinsurance licences make up the bigger portion of the business.”
Watkins is keen to emphasise the nature of Lloyd’s footprint in the region, arguing that it punches above its weight in terms of influence on the market. Lloyd’s has one person in Mexico, two in Colombia and three in Brazil. Their primary role is to regulate relationships as well as market development in other countries.
“We cover the entire continent very effectively from these three countries. But reinsurance is our sweet spot,” he says.
He highlights some of the challenges of operating in the region. One issue, which has been growing in significance, is a perception of corruption in some areas. This year’s Corruption Perceptions Index (CPI), which ranks 180 countries and territories around the world by their perceived levels of public sector corruption, suggests many countries in Latin America continue to be perceived poorly in this regard.
“With that backdrop, it’s good to stay in the reinsurance arena,” Watkins says. “We let domestic players write insurance, whatever class of business it might be, and we’re there to support them without needing lots of people on the ground.”
A patchwork of opportunity
Miller says there is great interest in Latin America as a whole, especially among players wishing to put reinsurance capacity to work. “There’s a lot of value we can bring to insurance companies seeking large treaty programmes. Large blocks of capacity can be built up,” she says.
“Different insurers are coming to us seeking additional capacity: top-up capacity, more reinsurance, protection, etc, but not necessarily only for straightforward treaty business.”
Watkins explains that the opportunities are best considered country by country, with each region facing different challenges and offering different opportunities as a result.
Brazil is a case in point. Big books of energy and marine business need transferring; agricultural risks also play a key role but natural catastrophe risks are less significant.
In contrast, Chile is a huge market for construction, and has a large exposure to nat cat risks. Watkins describes Colombia and Mexico as offering rich pickings for reinsurers, and notes that cyber is a growth class of business across the region.
Miller stresses that the region is delivering some very positive results for the market as a whole. “We’re driving through performance, and we’ll never stop doing that. It’s given us a strong foundation; we feel we are bringing out the best of our network worldwide.
“We are allowing our underwriters to be the best version of themselves.”
She notes the important role Lloyd’s plays in working behind the scenes, on behalf of the wider industry, to influence and advise regulators on their regimes. She praises the market’s international regulatory affairs team for its close relationships with regulators and governments. This is born in large part out of respect for the value of a Lloyd’s licence and its own structure, including the importance of the central fund.
Watkins concurs, offering a specific example: Lloyd’s has been working closely with regulators in Brazil to resist changes that would offer local reinsurers such as IRB a competitive advantage over overseas players—a form of protectionism.
“We’ve been working very hard to resist this insurance bill, which, if it’s passed, it could have a big impact on all reinsurers writing reinsurance in Brazil. But we’re in a good place now, based on the work we’ve done. We believe we can push back on the bill,” he says.
The importance of talent
Miller and Watkins reflect on the challenge and importance of finding and leveraging the right talent in the region. This is a nuanced issue: to operate in local markets requires a mixture of contacts as well as language skills and an understanding of local cultural distinctions.
Miller says: “Regardless of the countries we’re in or how we’re operating, those individuals must understand our industry, the Lloyd’s licence and the nuances of that local environment.
“We’re always looking for people who can represent us in a sophisticated manner, who can have those sophisticated conversations and help the market use Lloyd’s to its greatest advantage in a positive way. We’re educating people to understand and believe in the Lloyd’s model,” she explains.
Miller says a healthy talent pipeline will be needed given the growth in the region. She estimates that the Latin America market as a whole has been growing anywhere between 2 and 4 percent year on year. Exposure and rates are both growing.
“I see future growth in the Lloyd’s market for Latin American business. We will continue to clear the pathways and develop the business organically.”
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