‘Client centricity is in our DNA’
In a highly competitive environment, brokers need to harness the powers of innovation, client centricity, agility and diversification to stay on top, says Dimitris Tsesmetzoglou, CEO of Matrix Brokers at Lloyd’s, in an interview.
What are the main challenges facing the business?
Soft market conditions coupled with decreasing returns. In our region, we have experienced prolonged falling market rates and values, with an average 20 percent decrease at the start of every year during the last three years, on intermediaries’ revenues.
Paradoxically, instead of finding strength in consolidation, corporate (non-retail) as well as reinsurance brokers are being broken up into smaller parts, in the hope that they will increase personal earnings. In my view, this is simply prolonging an unsustainable model.
Consolidation is inevitable, given the intense competition and soft capacity. When your clients are consolidating, sitting around and hoping for the best is not going to get you far. It’s only in motor insurance (retail) intermediation that we saw consolidation due to increased competition and declining premiums; we now see schemes growing under large networks as the only way to survive. I expect to see this in the corporate and reinsurance side as well, and that’s what we are positioning for.
Have clients’ needs changed?
We are seeing clients return to “quality-seeking” relationships and solutions rather than just “price-driven” ones. Despite the common belief, they opt for superior customer service rather than just the lowest possible quotation. It makes sense: clients look for strong partners and they are willing to pay a market-reasonable premium for that.
This is very encouraging, given that Matrix’s main focus has always been to understand our clients, their ambitions, motivations and goals and then deliver to or beyond their expectation. Qualitative factors are increasing their importance over quantitative ones.
What is Matrix’s strategy to cope with these challenges?
It’s increasingly difficult to find growth. From a broker’s perspective it sometimes feels that the better job we do for our clients, the less we earn. Obviously we will always opt for the former and to make up for the latter, as we are here for the long term. The solution is to diversify by region and/or lines of business and to ensure a lean operation.
We have more than 80 employees in five offices and the company is growing. Our first six months of the year ran with an organic growth of 8.3 percent, with facultative business organic growth of 16 percent. Today 40 percent of Matrix’s turnover comes outside Greece and Cyprus and the aspiration is to increase that to 60 percent in the next couple of years.
For Matrix, staying relevant means providing strong and differentiated customer service. This is not just about protecting relationships or reducing the risk of mishaps. It is our way to distinguish our brand from the rest in a highly competitive market, by heavily investing in new technologies and our people. The former is the enabler, the latter is our DNA.
Are there opportunities for growth in the Greek market?
The Greek insurance market (life and non-life) is showing signs of growth and I believe in 2017 we will witness solid and sustainable development at a rate of 3 to 5 percent. The deal between Exin and the National Bank of Greece to acquire a 75 percent stake in Ethniki Insurance for €718 million is an example of foreign investors’ confidence in the potential of the Greek market. There is substantial opportunity for growth not only in Greece but also in the region and we are ready to grasp it.
Is the Greek insurance market appealing to investors?
Greece remains an attractive insurance market. There are still good opportunities not only for non-life & emerging risk coverage but also for life insurance. There is abundant alternative capital in the global markets which could be channelled to the right opportunity in Greece and provide comparably attractive returns. The Exin-Ethniki deal and the acquisition of an 80 percent stake of Eurolife by Fairfax are testament to this.
What are your plans for growth?
Our main objective is to be the broker of choice where we have established presence, through innovative and skilled management, while creating value for clients and shareholders as well as opportunities for our employees.
Our 2020 Agenda focuses on ring-fencing profitability and sustainability through value chain and size, incentivising new business, creating value from synergies and increasing our digital/innovation footprint.
For Matrix, expected regions of growth are where we have set up offices—Turkey, London, Eastern Europe and South Africa—and we invested last year in the marine field by building a strong team which has enriched our offering. We strongly believe those areas will lead the way in the future.
Dimitris Tsesmetzoglou is the CEO of Matrix Brokers at Lloyd’s. He can be contacted at: dimitrios@matrix-brokers.com
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