Lloyd’s chairman: Aon/Berkshire benefits ‘minute’

Lloyd’s chairman John Nelson says the additional business coming into Lloyd’s following the controversial Aon/Berkshire Hathaway deal is “minute”.

In an interview with the Financial Times following the release of Lloyd’s first-half results yesterday, Nelson appeared to rebut Aon’s assurances that the broker was placing more business into Lloyd’s following the deal.

When asked by the FT if the amount of business Aon was placing in Lloyd’s because of the Aon/Berkshire deal was significant, Nelson said: “In the scheme of things, because of the amounts involved, the short answer is no.”

Despite his criticism of the Aon/Berkshire deal, Nelson insisted to the FT that Lloyd’s has a “strong” relationship with Aon.

Aon revealed in March that it had struck a deal with US insurance powerhouse Berkshire Hathaway, whereby Berkshire would get an automatic 7.5% of any business Aon placed with Lloyd’s underwriters.

This sparked concerns that the deal would take business away from smaller syndicates.

However, Aon sought to reassure Lloyd’s, issuing figures saying that the amount of business the broker placed into Lloyd’s had increased by 17% in the first half of 2013 compared with the same period last year.

At odds

Nelson’s comments appear at odds with those of Lloyd’s finance and operations director Luke Savage.

Speaking to Insurance Times yesterday, Savage said the Aon/Berkshire deal was an endorsement of the underwriting discipline at Lloyd’s.

He said: The fact that the likes of [Berkshire chairman] Warren Buffett are willing to put up money to blindly follow what Lloyd’s is doing is actually a backhanded compliment.

“It demonstrates that Berkshire Hathaway has a great deal of confidence in how disciplined this place is as a market.”

However, Savage also suggested that the jury was out on how much the Aon/Berkshire deal had benefited Lloyd’s.

Noting the 17% increase cited by Aon, he said: “What I don’t know is whether that 17% is because of the facility or in spite of it.”