Shortly after Chinese insurance giant Ping An bought the Richard Rogers-designed building at One Lime Street last month, Ward used the £260m purchase to publicly criticise the building’s design flaws, not least the considerable expense of maintaining its externally-facing lifts.
Whether Ward would have vented quite so loudly if he had not been in the departure seat is unclear, but what is clear is that with less than five months to go in the role, he is happy to speak his mind.
He announced his departure late one Wednesday afternoon in early July, much to the surprise of many market commentators. The timing and the lack of a planned successor led some to comment that all was not well on the 12th floor, and that Ward and chairman John Nelson, who replaced the longstanding Lord Levene in October 2011, had not seen eye to eye over the speed of Lloyd’s’ technical advances.
But Ward is quick to dismiss such rumours, when asked if they fell out. “No, that’s not fair on John. And it’s not fair on the market,” says the 56-year-old.
“The reality is I’m not going to stay until I’m 65 to do this job. So it was always a matter of 'When is Richard going to move?’, rather than if he’s going to move.”
To deflect, he tells an anecdote that when he joined, in April 2006, he told one of his assistants when she asked, he would be in the job for “three to four years”. He is insistent the timing of his exit has meant Nelson has had time to “get to grips with the markets and the players” while giving Lloyd’s’ ruling council enough time to find a replacement.
He also hints that he may have left earlier, had things been different. Asked why he chose this of all years to step down, he admits that 2012’s strong financial results, when Lloyd’s reported a pre-tax profit of £2.8bn, played a part.
“In part because in 2011 we had a [£516m] loss. And it’s never good to step down when reporting a loss. It’s always better to go out, dare I say, on the back of a better year rather than a poor year.”
Despite his insistence that he is not the victim of some form of boardroom coup, he is equally insistent that the market will never change its “over the counter” ways, despite technical advances.
“There have been advances but those innovations have supported that human interaction,” he says. “You’ve got the underwriters sitting across four floors; 3,000 underwriters; 7,000 brokers coming in to see those underwriters. It’s that sort of interaction that we have with the underwriting community that allows the innovation.”
Despite advances in Lloyd’s messaging system and his push to remove paper from the process, the basis of business across those floors — a broker coming in to find out whether an underwriter will take a risk on a specific contract or project — has little changed for the past three centuries.
Although the building in which they sit is very different from Edward Lloyd’s 17th-century coffee house in which the market began, some things remain the same — from the presence of the waistcoated “waiters” who mark the loss of ships with a quill pen in Lloyd’s register, to the need for brokers to sit only on stools alongside the underwriters they wish to speak to.
“This market needs to be a face-to-face market. Technology will improve data flows and speed of transactions but what I firmly believe is that you’ll not get a computer replacing the broker-underwriter negotiation,” says Ward.
Ward joined Lloyd’s from the International Petroleum Exchange, which has since dispensed with open-outcry trading, but he remains resolute. “I come from the oil world where, yes, we could design a computer that enables people to trade with one another more effectively on a screen than face to face. I don’t believe that’s going to happen in the Lloyd’s market as the nature of that discussion around the risk is so important.”
During his tenure as chief executive — the longest in the market’s history — he has taken steps to ensure the future of Lloyd’s. Central to these was his “Vision 2025” plan, launched last year, designed to focus on the geographical markets the insurance market needs to expand into if it is to survive.
“Given what is happening in the global economy, and the shift in economic power from the west to the rest, we as a market place need to recognise that,” he says.
Inside the Lloyd's of London insurance building Photo: Reuters
Some 40pc of its current business comes from North America, 20pc from the UK and 16pc from continental Europe. “For us to retain the relevance that we have today, we clearly need to be able to do business from countries like China, like Brazil, like Mexico. It’s very difficult to say you are the specialist insurance market if you’re not doing any business in China come 2025.”
Lloyd’s opened a underwriting office in Shanghai, after receiving a Chinese direct business licence in May 2010, and Ward says it is now to open a second in Beijing. “We would love to have access to the onshore Indian market but they have their own challenges around the parliamentary system.
“The changes to the regulatory structure that would recognise Lloyd’s and its unique structure got tied up with the foreign direct investment cap. That legislation that was supposedly going to be passed through parliament was postponed.”
Lloyd’s continues to lobby both the UK and Indian governments, but Ward acknowledges the situation is unlikely to change overnight.
One fast-developing economy Lloyd’s has been successful in is Brazil, thanks largely to the deregulation of its reinsurance laws, which has allowed turnover there to more than double in the past few years. Closer to home, on the thorny subject of the European Union, Ward’s views are equally as strident. He badges the European single market “extremely important” and says the thought of being forced to negotiate access to the 26 different countries “does not fill me with glee”.
“There are elements of Europe that we find very frustrating, and if we find an opportunity to renegotiate certain parts of it, it would be fantastic, but it shouldn’t be at the cost of withdrawing from Europe.”
He makes these comments despite acknowledging that Lloyd’s has spent in excess of £300m preparing itself for the EU’s Solvency II insurance capital directive, which is now somewhat stalled.
“The reality is not all that money needed to have been spent. I do worry about the bureaucratic overlay that is imposed upon us through these regulatory directives to get us to do stuff that frankly isn’t providing a lot of value.”
As to who is to blame — the EU, bureaucrats, the UK Government — Ward says that blame can be apportioned across “all those bodies” and suggests that the regulatory structure and capital requirements in place are working.
“When you look at the Lloyd’s market place and look at how we dealt with 2011, the costliest year on record for the Lloyd’s market, the second costliest year on record for the insurance industry. Was our capital position impaired? No.
“What we were able to do was build our financial strength to the extent we’re now A-plus and on a positive outlook from all three [credit] ratings agencies.
“So we’ve been able to deal with extraordinary natural catastrophes, pay out claims far in excess of anything else we’ve ever paid out and still built our financial strength.
“We didn’t just survive the financial crisis, we expanded and grew during it. The brand has never been better. In that sense, it’s the right time to go.”
Ward may not have revolutionised Lloyd’s of London technologically, but he has put it on a forward foot financially, for which whoever succeeds him should be grateful.Richard Ward CV
Family Married, two sons
Education Exeter University
Career 1982-88 Science and Engineering Council; 1988-94 BP; 1994-95 Tradition Financial Services; 1995-2005 IPE; 2005-06 vice-chairman, ICE Futures 2006- Chief executive, Lloyd’s of London