Lloyd’s Strategy 2010-2012

April 2010

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Lloyd’s vision

Key Characteristics

A subscription market backed by mutual security A broker market; brokers are Lloyd’s distribution arm and are critical to its

ongoing success A London-based business Diversity across all aspects of the market

Role of the Corporation

To undertake the overall risk and performance management of the market To maintain and develop the attractiveness of the market

“ To be the market of choice for insurance and reinsurance buyers and sellers to access and trade specialist property and casualty risks.”

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Challenges in Lloyd’s competitive environment

Maintaining underwriting discipline

Maintain London’s position as the leading centre for specialist (re)insurance

Maintain access to business in the face of a changing distribution landscape

Maintain the attractiveness of Lloyd’s compared to other specialist insurance centres

Protect Lloyd’s capital, licences, brand and ratings

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The market's strategic priorities for the plan period

Maintain and develop the attractiveness of Lloyd’s

Maintain and promote the competitiveness of London as a financial services centre

Continue to improve the efficiency of business flows and placement, accounting and claims handling

Protect Lloyd’s capital and licensing advantages against an evolving regulatory landscape

Resolute focus on underwriting discipline and risk management

Continued application of performance management framework

Ensure high quality risk management developed and embedded at individual and aggregate levels

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Corporation priorities for 2010

Performance Management

Solvency II The Exchange

Claims Transformation

Access to Business

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Trends and issues in the global insurance industry

Geographical balance

The Lloyd’s market portfolio is heavily focused on North America and the UK, with limited penetration in the large developed Continental European insurance markets or smaller insurance markets in developing economies

Market portfolio mix

Lloyd’s market has seen a gradual shift towards more catastrophe exposed business, particularly in the US

Distribution

Continued structural changes within the broker market

Concentration of business with three largest brokers

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Lloyd’s response to these global insurance trends and issues

Geographical balance Established markets: London-based model using broker distribution and making

use of coverholders to access ‘smaller’ specialist business Developing markets: existing trading centres remain but preferred model elsewhere

is as a London-based (re)insurer

Market portfolio mix Market participants believe opportunities exist with small/medium specialist risks Support the business development activities of managing agents, promote Lloyd’s

in local markets, secure regulatory access where required, streamline and simplify access to Lloyd’s

Distribution Work closely with all distribution partners Areas of focus:

Development of the coverholder channel Strengthening the Lloyd’s distribution chain process and operational efficiencies Broker relationship management

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Strengths of the Lloyd’s market

Performance and risk management

Access to business

Capital efficiency and chain of security

Ratings

Brand

Diversity

Subscription market

Market cohesion

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Lloyd’s response: maintaining and promoting Lloyd’s strengths

Future activity in these areas will be focused on maintaining these strengths not on any major new strategic initiatives

Two major streams of activity already underway, enhance Lloyd’s strengths, and continue to be a high priority

Solvency II Performance management

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Investment for the future: Operating Environment

Future state of the Lloyd’s operating environment

An operating environment in which data is “entered once and used forever”; with common ACORD standards

It will be as easy to do business with Lloyd’s as with any other insurance market

This will be delivered through four major initiatives:

The Exchange Lloyd’s Information and Reporting Project Claims Transformation Future Processing Model

Response over the plan period

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People are the market’s main assets

Work will continue to develop skills and talent across Lloyd’s market in partnership with key market bodies (LMA, LIIBA)

Investment for the future: Talent management and development

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Operating at Lloyd’s provides market participants with access to a range of Corporation services e.g. tax and regulatory reporting, central settlement

A lot will be demanded of market participants over the plan period e.g. market reform initiatives, Solvency II

The Corporation will support businesses through this transition period wherever possible

Changing marketplace

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Visit lloyds.com/strategy for more information

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