Talk about a baptism of fire. When Lonmar chief executive Simon Rice met up with Insurance Times four years ago, he had just successfully led the Lloyd’s and international wholesaler through a management buy-out from AXA. He was full of optimism as SBJ Global Risks was rebranded to Lonmar to mark the change in the company’s history.
Rice is one of the London Market’s most recognisable characters. At 6ft 3in and 15 stone, he is an imposing figure, but he is so awfully British, in a good way. No wonder he has long-serving clients across Australia, US and Asia who like doing business with him. But bad luck doesn’t discriminate in favour of the good guys, and in the first two years of his tenure, up until the end of 2011, the business was dealt a series of blows.
The London Market has a dog-eat-dog mentality, epitomised by staff poaching. Lonmar fought one of these poaching attacks in court and lost. In February 2011, a judge dismissed Lonmar’s claim that alleged contractual breaches by three employees who moved to Tysers had caused losses of £2.5m.
“Most of my peers expressed support and sympathy on what they agree was a strange decision by the judge,” Rice says. The business suffered a second blow when Gallagher raided it for a number of staff. “In the end it was ... agreeable. I wouldn’t say amicable, more agreeable. But if I ever see David Ross [Gallagher chief executive] at a party ...” Rice trails off and laughs.
The final blow was self-inflicted and probably the most serious. Lonmar had to reimburse its underwriters £2m after its staff charged excessive commissions. “Clearly, somebody manipulated our systems, but we have made changes.
Our focus was on the client side. The people involved in casualty and marine and exceptional risks have moved on,” he says. “I engaged with the market quickly. Because of my candour and frankness no insurer had a problem with us.” Rice reflects: “From a personal point of view, it was a steep learning curve. I have some very good people and great support from non-execs and chairman and the exec team. We have tackled these things very well despite challenges thrown at us.”
New location and expansion
The business has just moved into plush new offices near Lloyd’s, all on one floor. The atmosphere appears good and its board members still actively trade in the marketplace. This is unique for a London market broker. To keep the business growing, Rice stresses Lonmar should continue to concentrate on its core markets and client-service proposition. Revenue wise, about 30% comes from the US, 25% from Europe and between 10% and 15% from Asia and Australia. The rest comes from the UK’s retail professional risks and high net worth business and Lonmar has invested in expanding its UK wholesale book, which will be a driver of growth this year.
A longer-term strategy is to win some of the more chunky big ticket premium business. For the meantime, though, Rice is happy with his lot. The business is 100% owned by management and there is a clear motivation to do well, he says. After a tough few years, it appears Lonmar, and particularly Rice, are heading in the right direction. Perhaps nice guys do win after all.
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