On an April trip back to London (I’m based in New York), to work out of Reactions HQ for a week I found myself rushing around the City a fair amount on my way to meetings.
In between overhearing people muttering about Spring’s failure to emerge and taking preventative action to avoid carefree drunken businessmen wheeling around the City on Boris bikes, one thing seemed more noticeable than it had been previously: insurance.
You cannot avoid it in London at the moment.
The industry has always been in the blood of the Square Mile, given the more-than-300-year history and importance of Lloyd’s. But it has always been viewed as the nerdy brother to the banking industry. That has half changed now. Bankers’ names are mud and it is insurance in the ascendency.
This was most noticeable in the number of new tall buildings sprouting up on London’s skyline.
The Swiss Re and Willis buildings have been fixtures next to Lloyd’s on Lime Street for a good a few years now. More reminders of the industry are springing up rapidly. Across from Lloyd’s, the Leadenhall Building – you and I know of it as the Cheese Grater – is nearing completion ahead of its opening next year, with the Aon logo slapped all over the building site. The world’s biggest broker is taking 10 floors– some 191,000 square feet – of the 736 foot tall building.
Amlin in December revealed it would also rent eight floors in the building taking up 111,000 feet from March 2015. The Lloyd’s insurer’s announcement pushed sign-up for the building past 51%.
There’s more. Ascot Underwriting is taking 30,000 square feet in 20 Fenchurch Street – known as the Walkie Talkie because of its distinctive curved shape.US insurer WR Berkley is planning to build its own 40-storey building on the corner of Lime Street and Leadenhall. Insurance broker Jardine Lloyd Thompson in November announced that it will be moving its global headquarters and London-based business operations to The St Botolph Building, near Aldgate, taking a total of 287,000 square feet over seven floors.
One rumour doing the rounds while I was in London was that even that City’s oldest insurance institution was considering jumping on the moving craze. Word was that Lloyd’s is mulling moving out of its iconic building following its purchase by Chinese insurer Ping An. The building is owned by Commerzbank at the moment. The talk seems a little fanciful, however. It’s hard to see who else would need such a vast trading space these days, for a start.
All this activity is a result of the optimism about the growth of the London insurance market. For example, when revealing his firm’s move to bring its 1,800 staff together under one roof, Dominic Burke, JLT’s CEO, commented: “This is an exciting new stage in JLT’s development that reflects the rapid growth of our business over the last few years and fully meets our evolving needs as we embark on the next phase of our growth.”
The London insurance market also recently received one of the biggest endorsements possible in the financial world when Warren Buffett’s Berkshire Hathaway agreed to take on 7.5% of Aon’s business placed at Lloyd’s. This controversial deal has caused waves in the market (see p6) but is a big show of confidence in the business coming to London.
Compare all this with the lacklustre take-up rate of new London buildings that lie more than a leisurely stroll away from Lloyd’s and it is easy to see insurance is driving the city’s financial services sector at the moment.
The Shard, Europe’s tallest skyscraper, is proving that businesses are even more loath than London’s famed cab drivers to go south of the river. In addition, The Pinnacle, located in Bishopsgate just too far to be a convenient walk from Lloyd’s, has been renamed The Stump in some quarters because work stopped after only seven floors had been built because of a lack of investment.
I say that the respective views of the banking and insurance industries has partly changed because unless you were looking for these signs of the insurance industry’s strength you would not hear about any of this.
Outside of the insurance industry no one says a word. UK prime minister David Cameron, who at least turned up at Lloyd’s last year to help launch the market’s Vision 2025 plan, barely mentions this success story.
Some in the industry are trying to change this. For example, Mairi Mallon, an insurance PR and blogger, has taken it on herself to point out the flourishing insurance market in London and grumble about the lack of awareness about it.
On her blog, Mallon noted: “This sweeping ignorance goes right up the corridors of power. Take David Cameron’s Lord Mayor’s Banquet speech in November last year in which he promised to promote the City of London’s financial sector. Insurance got half a sentence. ‘From Lloyd’s of London, the world’s first insurance market for trading in the 17th Century to the first international trading companies own by shareholders in the 18th century.’”
Action to promote the industry is to be applauded. In the meantime, however, perhaps it is enough that 2013 is shaping up to be a strong year both in London and for the global insurance and reinsurance market as pricing slowly improves.
As William Berkley, chairman and chief executive officer of WR Berkley, one of the firms caught up in London’s insurance sector building craze, noted in his first-quarter earnings.
“We are optimistic that our business will continue to improve, and 2013 will be an excellent year.”