Wednesday 02 July 2014 – After ten productive years at Lloyd’s, Luke Savage steps down as Lloyd’s Director of Finance and Operations. We found out what he’s most proud of and what he’ll miss from his decade at the Corporation. (source: Lloyd’s of London)
Luke Savage
Which of the initiatives you implemented at Lloyd’s are you most proud of?
The one people cite most is leading Lloyd’s preparations for Solvency II, but that has been a team effort involving dozens of people across the Corporation, so I don’t feel I should take personal credit. There are a number of internal initiatives I’ve influenced that have helped leave Lloyd’s in better shape, from helping change the central fund from a narrow bond and equity-focused fund into something much more diversified, to supporting IT’s journey from ‘below expectations’ to ‘exceeds expectations’.
Externally, I’ve worked with the hardship team to increase hardship payments to those worst affected by reconstruction and renewal in the 1990s and turned these from discretionary to guaranteed payments, which has provided lots of predominantly elderly people a better quality of life and greater stability than they would otherwise have had. Even the children’s Christmas party had its foundations in me hiring Santa to visit Gallery 5 back in 2004, and since then it has grown into something that is now quite a special part of being at Lloyd’s!
What have been the most challenging aspects of your position at Lloyd’s?
The role has grown tremendously. I joined as Director of Finance and Risk Management. In 2006 I took on Market Services as well as Technology and Facilities, and then in 2012 I took on Market Modernisation as well, so I’ve been juggling an awful lot of balls at once. Across any of these areas the biggest challenge is to bring the market along with you. Most managing agents are themselves part of a group with internal demands coming from their own head offices, so it means you have to rely on persuasion and influence rather than mandate to get things done. You can be sure there will always be grumblings because you can never please all of the people all of the time.
What are the toughest obstacles you’ve had to overcome at Lloyd’s?
The financial crisis of 2007/8 was the biggest challenge for the financial sector generally, but the insurance industry as whole came through that relatively unscathed, which I think is testament to what a relatively safe and well managed industry we are. The biggest challenge I’ve faced is preparation for Solvency II. Lloyd’s unique structure means we have never easily fitted into the framework that works for the rest of the industry, so we have had to work constantly since 2006 to make sure Solvency II implementation won’t disadvantage us.
Do you feel you are leaving Lloyd’s well prepared for Solvency II?
I think I’m leaving it in pretty good shape. It has been a tremendous effort involving dozens of people in the Corporation and hundreds across the market, which has spent in total between £300-400m in its preparations. There is plenty more to do to make sure Lloyd’s does secure its model approval, but the market has pulled together so far, and as long as there is no complacency we will get there.
Is the Lloyd’s Corporation in better financial shape now than in 2004?
We are better off in so many ways. We’ve made many moves that have improved our position – one was our foray into the debt markets not long after I joined and again in 2007, which bolstered the central fund significantly; another is the Berkshire Hathaway deal, which extinguished the residual exposures to Equitas and cleared all the open years that at one point had liabilities from the likes of Enron, Worldcom and 9/11 that exceeded the Equitas liabilities.
It is gratifying to see how the improvements in both financial strength and the way we oversee the market have been recognised by the ratings agencies. Fitch recently upgraded us to ‘AA-‘. This is the second upgrade in my time at Lloyd’s – a period in which most of our peers have at best stayed still and most have been downgraded. For the last ten years we have bucked the industry trend, and the upgrades prove we’ve been getting something right.
How can Lloyd’s improve its global appeal and competitiveness going forward?
By delivering on its Vision 2025 roadmap. Corporate history is littered with companies that failed because they didn’t adapt to changing world around us. Take Kodak for example; it was the market leader for film and cameras for decades. Kodak invented the digital camera but failed to see how digital cameras would change the way the world works and not only did it lose its first mover advantage, it went out of business. The world is changing and we need to change with it. This ethos is encapsulated in Vision 2025, and comes through in the work we are doing to develop new licences, enhance distribution chains, and making ourselves easier to do business with.
What is your fondest memory of your time at Lloyd’s?
I am a keen sailor and have been fortunate enough to spend Cowes Week each year for many years aboard the Lloyd’s Yacht Club boat, Lutine, entertaining senior guests from the market with Richard and Sean [former CEO Richard Ward and current CRO Sean McGovern]. It’s a fantastic way of getting to know our customers outside the work environment. I have many fond memories of this both on and off the water, and it’s something I will miss.
What will you miss most about the Corporation?
I have spent the best part of decade surrounded by a huge number of clever, committed and loyal people who are great at working as a team. According to our latest staff survey, 97% of Lloyd’s employees say they are proud to work at Lloyd’s. This is pretty special and the contrast with the investment banking world, which is where I came from, is stark. I don’t think people who work at Lloyd’s should lose sight of how fortunate they are to work in such an environment.
