Speaking days before Mitsui Sumitomo Insurance offered to buy Amlin, chief underwriting officer Simon Beale spoke to GR about profit, broker relationships and MENA expansion
Decent investment returns for insurers are unlikely for the foreseeable future, so do you think there will be increasing pressure on the underwriting side of insurers to make profits?
The lack of investment returns is not new, but I think it is incredibly healthy. It has really forced pure underwriting discipline into the market. That’s good for the future. If underwriters are focused on underwriting performance and aren’t looking to get out of an underwriting loss situation by investment income, that’s very helpful for the industry. It’s also allowed the need for a much more technical approach, and that will benefit the industry in the long run.
Amlin has a place on the Lloyd’s platform that opened in Dubai in March, so what are your ambitions for this platform?
As far as we’re concerned, we set up in Dubai for two reasons. One is that Lloyd’s went there, so that’s helpful from our point of view as it set up a platform that we could join relatively easily. We did Singapore before that, and we’ve done Shanghai. That makes sense. The other reason is that our strategy is around developing the hubs. So we haven’t built a multitude of offices in various places, we’ve concentrated on hubs where the broking fraternity tends to build up. Singapore is a very good example of that, and Miami. For the specialist businesses, having that expertise sitting in a hub is critical. We’ve been very pleased with our first half-year performance in Dubai, and beat our expected income levels. That’s largely as a result of a real welcome out there, particularly on the marine side. There’s a thirst for that level of expertise.
So what’s the future for Dubai? I think it’s very strong. There’s a great opportunity for growth there.
What is important is to work in partnership with brokers to maximise their knowledge of their portfolios and their clients’ portfolios
Do you think the platform could open up other regions just outside MENA, as some believe?
How much further afield it can go is an interesting question. How far can a hub service other countries? I would be surprised if it can service sub-Saharan business. But what I would say is that countries such as India have a very strong trading relationship with Dubai – and that may support some Indian business. But again, it’s just a hub and it can only do so much logistically.
How do you see the current role of specialty (re)insurance brokers in the London market? Are they trying to claim too much control by using approaches such as broker-led facilities?
It’s very cyclical, and we’ve been there before. Brokers have had the upper hand versus the underwriters, and they probably have now.
But I don’t think that they are abusing that power. The point is that they have got, and made much of, the data they hold.
That has enabled them to analyse the risks they are intermediating, and therefore the leverage they can play on the market to enhance their clients’ positions. So they are definitely in that position, but I don’t think we worry about that too much.
We haven’t built a multitude of offices in various places, we’ve concentrated on hubs where the broking fraternity tends to build up
How do you believe this situation will develop?
What I think is very important is to work in partnership with the brokers to maximise their knowledge of their portfolios and their clients’ portfolios to be able to enhance our capabilities. If we had greater understanding of data and used it better, we could use the brokers’ data, help them analyse it in a way that’s beneficial to their client and bring more efficiency.
Overall, we are in a stronger position in partnership with the brokers to be able to deliver what’s necessary for clients.
What is very important is that we keep a focus on the underwriting profit and we don’t allow brokers to abuse the situation. That is probably what we’ve seen in the past, but I don’t see that at present.