Alpha Insurance Analysts, soon to commence trading as the third members’ agent in the Lloyd’s market, was this week revealed to have taken clients from Hampden, currently the largest members’ agent, worth £230m in capital.
According to Alpha, the FSA has tied its hands by only allowing it to take on existing Names for the start of 2008 – after which it says it will be free to attract new names.
It should not come as much as a surprise, therefore, that in a market controlled by two companies – Argenta and Hampden – somebody suffers a loss of business.
Argenta does not appear to have suffered such a trauma – the likely reason being that Alpha’s two top dogs, James Sparrow and Emma Royds, had worked for CBS Private Capital, the firm acquired by Hampden in 2006. On the flip side, such a poach was probably not a complete surprise for Hampden.
It appears that Sparrow and Royds have merely taken on old clients; ones with whom they formed relationships of trust when at CBS. Sparrows said he “did not agree with Hampden’s business practices”, and it seems that he, along with Royds, have managed to convince some old clients that Alpha can do better.
The Competition Commission was alerted to the dominant positions of both Hampden and Argenta just after the CBS acquisition, but let this micro-market remain as it was. Alpha has probably done them a favour by liberating it a little.
In any case, with the number of Names still in decline, the added thump of a third competitor might help attract a few more.
The loss of capital, while it will no doubt impact Hampden, was smaller than the amount of capital it took on by acquiring CBS, which was around £700m. Nigel Hanbury, Hampden chief executive, cited this as the reason Hampden will not suffer greatly, pointing also to the current high profitability of the Lloyd’s market and associated high profits taken by Hampden members. In simple maths, Hampden still has £470m more capital to control than it did in early 2006.
