John Nelson on mergers and global insurance hubs

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The trend towards top-level Lloyd’s insurer M&A is good for Lloyd’s, according to chairman John Nelson.

Speaking to StrategicRISK’s sister title GR at the 2015 Monte Carlo Rendez-Vous this week, Nelson said that consolidation was affecting all parts of the insurance world and was likely to continue at speed until interest rates rise.

Noting that the strong performance of Lloyd’s players made them attractive to outside investors, Nelson added: “In terms of consolidation therefore, at the moment this seems to be people wanting to come into Lloyd’s more and invest more.

“In a way, that is welcome. If that creates - which it seems to, but we’ll see for sure as time goes on -if it creates a greater number of really powerful managing agencies with international ambitions, that is good for Lloyd’s.

“You will hear some of the Lloyd’s traditionalists saying ‘well it means all our capital is coming from overseas’, but we ought to remind ourselves that a very high percentage of Lloyd’s capital has come from outside the UK for many years, so this is not a new phenomenon.”

Nelson added that the world was also unlikely to see many more large insurance hubs spring up.

“I would say, in terms of hubs, I don’t think there will be many more big hubs established,” he said. “One or two, maybe, around the world. What I do think is that we are going to have more co-location models around the world. For example, in Australia we are going to a model where we have more managing agents actually in our offices, and that seems to work well.”

Nelson said that India and Turkey were two countries Lloyd’s was focusing on strongly.