When Lloyd’s of London executives began looking for its fifth office location in the U.S., it didn’t take long to narrow the field.
The London-based insurance market gets 38 percent of its premium revenues from the American market, with the Southeast accounting for about 20 percent of that volume.
Atlanta, a transportation hub serving as the commercial center of the region, was also hub for insurance companies, making it an attractive place to promote the Lloyd’s brand in the U.S.
“Lloyd’s America wanted to develop more of a marketing and promotional role and really try to educate both the insurance professionals and the general public on Lloyd’s,” said Rodney Smith, who became regional director in Atlanta four months ago, though the office didn’t officially open until April 25.
Education is in order, since the market’s services aren’t exactly easy for outsiders to understand.
Lloyd’s is not an insurance company. It’s a market that is to insurance policies what stock markets are to financing.
Lloyd’s matches 82 separate insurance companies – it calls them “syndicates” – with brokers or individuals who bring specialized risk that traditional providers aren’t equipped to insure.
In other words, Lloyd’s doesn’t deal with traditional car, home or health insurance. It insures complex and specialist risks like the building of the new World Trade Center tower, around-the-world excursions and recently, the hair of Pittsburgh Steelers safety Troy Polamalu, a Head & Shoulders shampoo spokesman.
Often, these assets are too valuable (or unusual) for one company to handle on its own, so the syndicates pool resources within framework of the Lloyd’s market, each providing part of the coverage. Lloyd’s guarantees the policy from a central fund.
For instance, an ocean liner carrying goods from China to the U.S. might be attract five syndicates, each agreeing to insure 20 percent of the risk, though the shares don’t have to be equal.
In the U.S., property makes up the bulk of the Lloyd’s portfolio. The Southeast is a prime market, since much of the region’s land is vulnerable to natural disaster, Mr. Smith said. Consider the tornadoes that ripped through Alabama late last month, or Hurricane Katrina slamming the Gulf Coast in 2005.
Energy is another major market. Lloyd’s syndicates were covering British Petroleum plc’s Deepwater Horizon well when it exploded, sending millions of barrels of oil spewing into the Gulf of Mexico last summer.
“We did cover that rig and we were able to make the payment for the loss of that rig in six days,” Mr. Smith said. BP didn’t get the same closure. After setting aside $20 billion to help cover claims in the weeks after the spill, the company is still paying them out.
Lloyd’s also offers reinsurance, which is basically insurance for insurance companies, helping them avoid being overleveraged in the case of a major loss that taxes their ability to pay out claims.
The company has offices in New York, Chicago and Los Angeles. It also has a presence in Frankfort, Ky., where it has a long history of insuring thoroughbreds.
The Buckhead location put the company close to many “excess and surplus” insurance companies – those that are exempt from filing rates with the state insurance commissioner and typically handle risks that don’t fall under the umbrella of companies like Travelers and State Farm, Mr. Smith said.
Examples of such companies include Arch Insurance Group and Chartis.
Mr. Smith has been speaking at universities and working with brokers around the region. The Atlanta office has no plans to increase the number of brokers, only to better interact with existing ones, he said.
Lloyd’s Chairman Lord Levene traveled to Atlanta to officially open the office last month. Its territory includes Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina and Virginia.
The British American Business Group in Atlanta hosted a reception that was attended by Georgia Insurance Commissioner Ralph Hudgens and many insurance brokers, carriers and service providers.
Atlanta’s British community saw the Lloyd’s office as a seal of approval for ties between the U.K. and the Southeast.
“Lloyd’s of London’s choice of Atlanta continues U.K. investment in Georgia, where U.K. industry employs almost 30,000 people,” said Phil Box, president of the BABG, who also called the move “an important vote for Atlanta as the key city for the Southeast U.S.”
The optimism extended to government representatives as well.
“Lloyd’s already has many successful, longstanding businesses ties in Atlanta,” said British Consul General Annabelle Malins in an emailed statement. “I am pleased that their new office will deepen further the U.K.-U.S. business links in the Southeast.”
Click here for more information on Lloyd’s and the Atlanta office.
