Insurers in Lloyd’s of London have little to fear from plans to set up a rival in New York, according to Tom Bolt, underwriting performance director at the 300-year-old market, in part because of the surplus of insurance capacity.

Mr Bolt says it will be difficult to set up a mutual-type market from scratch as proposed last week by David Paterson, governor of New York.

“Because not all kids play nicely together, getting people set up to work right and care as much about the mutual as they do about their own individual economic interest is a difficult thing to achieve,” says Mr Bolt in his first interview since taking on the most powerful role in Lloyd’s at the start of this year.

“One of the questions you’d ask yourself . . . is how much do you want to start an exchange heading into a soft market, where price adequacy is going to be less interesting than it has been at other times?”

Mr Paterson wants to establish a New York Insurance Exchange as part of efforts to maintain New York’s status as “the financial capital of the world”. Attempts to create such an exchange in the 1980s were unsuccessful.

Mr Bolt, who must approve the annual business plans of all syndicates in Lloyd’s and is responsible for the strength of the market, may already be reaching his goal of ensuring that “everybody’s at least uniformly unhappy with me”.

The 52-year-old worked with Rolf Tolle, his predecessor, for the final three months of 2009 and has been involved in business plan approvals for 2010.

The recovery in insurers’ capital bases after strong investment performance last year, alongside the lack of catastrophes and the economic slowdown, has meant there is a surplus of insurance supply over demand.

“The [managing] agents would argue that they felt like there’s a lot more push-back this year and there was,” Mr Bolt says. “We did push back on loss ratio assumptions and on volume targets.”

Mr Tolle was universally respected as the first franchise director under the regulatory structure brought in the mid-2000s. He rubbed some people up the wrong way in the close-knit culture, but is credited with strengthening the market financially and competitively.

The way the market is now regulated and run evolved under Mr Tolle, but that does not mean that Mr Bolt will be unable to leave his own mark. He agrees he will be a caretaker in the sense of guarding the principles, “but in terms of the process, we’re going to try and make it a little easier, a little more transparent and more continuous”.

Mr Bolt, a bright and engaging speaker, should not struggle to garner respect at Lloyd’s. His background revolves around running insurance businesses – some inside Lloyd’s – on behalf of Warren Buffett.

He has worked closely with Ajit Jain, who runs Mr Buffett’s reinsurance businesses, and Mark Byrne, who has run hedge funds and financial products businesses for Mr Buffett and now runs Flagstone Re, his own Bermudan reinsurer.

With typical self-deprecating humour, Mr Bolt says he was attracted to the Lloyd’s job in part because it is “sort of God’s answer to a guy with attention deficit disorder in insurance”.

But it was a friend who summed up the value of Mr Bolt’s job. “He just starts laughing and I said: ‘Why are you laughing?’ He said: ‘Look, any time you’re Cardinal and they ask you to be Pope, who turns it down?’”

For interview transcript see

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