麻豆原创

Earlier this year Tom Bolt took over one of the most important positions at Lloyd’s. As Director of Performance Management, he heads a team that oversees the business plans and the performance of all of Lloyd’s syndicates. His mandate is to assure that underwriting discipline is maintained under a system that aims to minimize the extent to which syndicates are exposed to excess risks.

“It’s really regulation with a small ‘r’,” Bolt explained in an interview at Lloyd’s. “The regulator is the FSA” [Financial Services Authority]. Bolt follows Rolfe Tolle, the first person to hold the position following the change over to a franchise system in 2002. By general consensus the initative has served Lloyd’s very well, smoothing out, if not eliminating, the ups and downs of the cycle, and giving syndicate managers needed direction and oversight.

Like Tolle, Bolt subscribes to a directional, rather than a confrontational approach to regulation. “For me the best football games are the ones where you really don’t notice the referees,” he said. “They have a quiet word here or there,” but they calm things down and avoid problems. That’s more or less Bolt’s approach to his job. “If I do the job well, like a good referee, it gets better results.”

Bolt is no newcomer to Lloyd’s. He began his career in banking in Texas, and moved into insurance when he joined Berkshire Hathaway. After a brief stint with Bankers Trust, where he developed a number of small insurance companies for the bank, he rejoined Berkshire in 1993 as head of its European Division. He described his experience with Bankers Trust as “the right job for the wrong shareholder,” so when the world’s most prominent shareholder, a certain Warren Buffett, invited him back to Berkshire he went willingly.

In 2000, Bolt worked with Ajit Jain, one of Berkshire’s top executives (and a possible successor to Buffett) on an immense project for CGNU (the future Aviva), which resulted in Berkshire’s acquisition of a Lloyd’s Syndicate, whose management responsibility was assigned to Bolt. “Ajit likes to save money,” said Bolt, “and since I was already in London, I decided to stay.”

Although his new position is quite different from being a syndicate manager – he’s more or less on the other side – his experience and knowledge of the market and of Lloyd’s made him an ideal candidate to replace Tolle.

Asked whether some of the recent catastrophes would alter how the Franchise Board deals with the syndicates’ exposures, he explained: “We look at the credit risk, and the policy terms and conditions, who are the counterparties, etc.” But there’s usually no necessity to intervene, as part of the evaluation process has already analyzed these factors.

This doesn’t mean that Lloyd’s does nothing when a major catastrophe occurs. “After the Chile earthquake, we sent a team of claims professionals to gather information and support our policyholders,” said Bolt. [See also IJ web site – /news/international/2010/06/18/110848.htm for further details on this mission].

There are, however, “certain lines of business, such as professional liability or trade credit risks,” which we might examine more closely due to economic conditions. In addition, “I’m told that there are more claims at the beginning and at the end of a recession than there are in the middle,” he said. “This affects the entire market, not just Lloyd’s.”

He also explained that, somewhat ironically, Lloyd’s recently introduced Electronic Claim File, “makes it easier for everyone to be informed of a claim.” This can “lead to a laundry list of real and potential claims which may or may not materialize.” It also makes it harder to calculate losses accurately.

Of particular interest for U.S. agents and brokers is Lloyd’s coverholder system, through which a designated agent can write business for Lloyd’s syndicates. “31 percent of Lloyd’s business is placed through coverholders,” said Bolt. However, he went on to explain that the selection process is carefully guided by Lloyd’s managing general agents. Before they “give the pen” to anyone, they must be absolutely sure of their experience and have complete trust in their commitment to observe the syndicates, and Lloyd’s, underwriting strictures.

“There’s a standard set of practice guidelines and audit reports, managed by a processing system called ‘Atlas,’ which examines their processes and their business plan,” said Bolt. “To quote Ronald Regan, it’s ‘trust, but verify’.”

As he indicated earlier, the “FSA is the regulator,” but not for much longer as the newly formed Conservative/Liberal Democrat Government has undertaken to change the regulatory system in the UK by putting it under the control of the Bank of England, and forming a new Consumer Protection and Markets Authority (CPMA), which will be charged with regulating the conduct of every authorized financial firm providing services to consumers, including the insurance industry [See IJ web site – /news/international/2010/06/22/110935.htm ].

“As far as I can tell, it will be about the same as before,” Bolt said. “As Lloyd’s is basically a wholesale market, we’re also less affected” [by regulations designed to benefit individual consumers.

However, he pointed out that when the FSA’s status became uncertain, it briefly lost the services of Hector Sants, who had built confidence with most of the industry. As a result the UK’s input and influence with CEIOPS (Committee of European Insurance and Occupational Pensions Supervisors) was diminished. This meant the new regulations contained in Solvency II, that will govern the European Union’s insurance industry after 2012, could pay less heed to British interests. Sants has now elected to return to his old post, and this “would fill the void,” Bolt said.

Both of Lloyd’s Franchise Directors have not been British. Asked about this, Bolt gave an enigmatic smile and said, “I’ve heard that, too, but I really have no comment.” An explanation, however, might lie in his analogy of his job to that of a football (soccer) referee. In international matches the referee is always from a country that is not involved in the match he’s refereeing, as are the linesmen. Given that the majority of Lloyd’s underwriters and brokers are British, perhaps having a referee from a more or less neutral country, makes a great deal of sense.