Speaker 1:
From the library of the New York Stock Exchange at the corner of Wall and Broad Streets in New York city, you're Inside the ICE House, our podcast from Intercontinental Exchange on markets, leadership, and vision in global business, the dream drivers that have made the NYSE an indispensable institution of global growth for 225 years. Each week, we feature stories of those who hatch plans, create jobs, and harness the engine of capitalism. Right here, right now at the NYSE and at [inaudible 00:00:33] exchanges and clearing houses around the world. And now welcome, Inside the ICE House. Here's your host, Josh King of Intercontinental Exchange.
Josh King:
Eight years ago, while working for the global insurance broker Willis, that was NYSE ticker symbol WSH, it's Willis Towers Watson now, we had the heady idea to send a young man, the then 19-year-old Parker Liautaud on an unassisted walk from the coast of Antarctica to the South Pole, taking regular core samples of the frozen surface of the continent to aid in research of our rapidly changing climate. We called it the Willis Resilience Expedition, because at its core, creating resilience is what insurers do, and what we hoped we could do by helping the planet do, be resilient in the face of change.
Josh King:
That's the crux of insurance. Assess the risks, hope for the best, but plan for the worst, gathering up everyone else's risks, calculating the probable frequency and severity of calamities that could befall them, assigning premiums to cover those potential pitfalls, pool the money and pay out claims that the insurers hope will match its models for how much they'll have to reach into their coffers. All the while, in another part of the building, savvy investors would put that idle money to work in the market, making a decent investment return until the time comes to pay the piper. That, in one long breath, is insurance 101.
Josh King:
Anyway, to help promote our big journey to the South Pole, We built a television studio in the lobby of our Willis building at 51 Lime Street in the city of London, a gorgeous skyscraper designed by Lord Norman Foster. For 19 straight days in 2012, as Parker made his way across the Antarctic tundra, we produced and broadcast a 60-minute news program tracking Parker's every step, but also sharing stories about how insurers and others were working to make our world more resilient.
Josh King:
I suppose that story came to a head just a few weeks ago, when world leaders met in Glasgow at COP26, a gathering previewed on this show by the UN's Special Envoy for Climate Action and Finance, former head of the Bank of England, Mark Carney. But back in 2012, I couldn't have imagined how the story would play out. I would walk from our office on Lime Street to catch some fresh air and look up at the historic headquarters of Lloyd's of London at 1 Lime Street, designed by Richard Rogers, and hailed by her majesty Queen Elizabeth when she opened the building in 1986, and think about how the world managed its risks and insurers made their clients more resilient in the face of them.
Josh King:
That work never is finished. The best-laid plans always go sideways, but Lloyd's still stands, even if it's building does so through Mr. Rogers' inside-out design. In a minute, our conversation with Bruce Carnegie-Brown, Chairman of Lloyd's, whose marketplace has undergone a massive transformation under his leadership. He championed the need for the 400 firms that make up the specialist insurance market to move away from the wholly analog processes to more digital and efficient systems. He has helped scrap the paper-based trading in favor of more digital deal making, is embracing sustainability and ESG, and is expanding where Lloyd's takes its business. Our conversation with Bruce Carnegie-Brown is coming up right after this.
Speaker 3:
And now a word from On Holding, NYSE ticker ONON.
Speaker 4:
Pause is essential. It's part of the process.
Speaker 5:
Training doesn't end when my body stops moving.
Speaker 6:
Recovery looks different for every athlete. We have different needs, different goals, different abilities.
Speaker 5:
One thing we share, our bodies need time. Time to heal.
Speaker 6:
The moment I stop training for the day, what people maybe don't realize is that the training is still going on.
Speaker 4:
In a way, the training never ends. The journey just starts again.
Speaker 5:
Pause is sanctuary. Familiar spaces and comforting routines. It clears your mind and rebuilds your body.
Speaker 6:
Let the healing begin. Time to reset. There is power in pause.
Josh King:
Our guest today, Bruce Carnegie-Brown, is Chairman of Lloyd's of London, the world's leading insurance and reinsurance marketplace. He was appointed to that role in 2017 and serves as Vice Chairman of Banco Santander, Chairman of Cuvva, a digital motor insurance business, and perhaps closest to his heart, Chairman of the Marylebone Cricket Club, or MCC. Bruce previously worked at JP Morgan for 18 years in a number of senior roles before becoming a fixture in the global insurance, reinsurance, and broking industries. Welcome, Bruce, Inside the ICE House.
Bruce Carnegie-Brown:
Good to be here, Josh. Thank you.
Josh King:
So welcome to the other financial center of the world beyond the one that I just talked about in the city of London. What brings you to town?
Bruce Carnegie-Brown:
Actually, I'm coming with a delegation of UK business folk across the financial services and professional services space to reconnect with our colleagues in the United States. So one of our themes here is that the timing is pretty good, not least because it's post-pandemic, but because it's post-Brexit, and with a new US administration that is interested in reopening multilateral engagement, we think there is a real opportunity to start talking about greater regulatory cooperation between the US and the UK that would support the ambitions of both economies, really, in the financial services space.
Bruce Carnegie-Brown:
And frankly, it's unsurprising we have come to New York. The flows of business between New York and London are huge and have been huge for decades. We're not opening doors that aren't open for us, but it is an opportunity to reconnect, to move on beyond Brexit from UK a perspective, to see America a bit front-footed again after a period of quite insular reflection, should we say, in the last few years.
Josh King:
Let's start at that front door, that building. With so much fashionable and cutting-edge architecture spiraling out of the city of London from the Shard to the Gherkin to the Spire London and 20 Fenchurch Street, and now the Trellis, do you think you're walking into an anachronism in the morning when you walk into that building?
Bruce Carnegie-Brown:
Well, people have a huge amount of affection for the building, and it is very much at the heart of the insurance sector in London, as you well know from your time there. And so it has that iconic magnetic appeal to it, and one of the great magnets. And I guess it starts with Lloyd's because we have been there 300 years, so the insurance industry has kind of grown up around that space, although not that specific building, is the ecosystem that we have in London that allows it to be the center, the global center, for complex international cross-border risk management. So irrespective of getting inside the building, it represents something that is truly special for the UK, for the city of London, and for the insurance industry.
Bruce Carnegie-Brown:
The challenge behind your question, though, is it's important that it's relevant, and what you don't want to be doing is coming into a museum. And we're perfectly happy to arrange tours of people who want to see it in a museum context, but it's got to be a workplace that is relevant for modern business being executed well, because we have complex and we have sophisticated customers who need the best service and the best resolution of their risk management issues.
Josh King:
You graduated with First Class Honors from Exeter College in Oxford, where you studied English literature. How did the worlds of Chaucer and Lord Byron lead you to the world of investment banking and eventually insurance?
Bruce Carnegie-Brown:
Well, accidentally. Frankly, I'm really an opportunist in terms of choosing English as my degree subject. That was opportunity. I appeared to be quite good at it. It's certainly something you can really enjoy getting through the world's literature in order to qualify for a degree. And I mean, I did ask my tutor for a reference for my first job, and he seemed surprised. He didn't think that English graduates wanted to get employed, so I was a little unusual in tumbling straight into the world of work.
Bruce Carnegie-Brown:
And I chose banking. At that time, it seemed exciting. The city of London seemed exciting. I didn't really have any connections to the city beforehand, so I did all of those milk round interviews with several institutions and was lucky enough to get offered a job. And of course, very soon thereafter, it coincided with the big bang in the city of London, and of course the thing exploded and the incoming tide carries its boats. And so I have been very lucky to be on that tide and the explosive growth of securitization of the financial services industry globally. But frankly, of course, very obviously centered in places like New York and London has been a rare privilege to be part of.
Josh King:
Something in life prepared you to help institutions embrace things that are outside of their comfort zone. And while in college you served as the Head of Entertainment and convinced the powers that be in their ivory towers to let rock bands play in the quads, what bands passed through college and did convincing the faculty prepare you for life in investment banking?
Bruce Carnegie-Brown:
You have done your homework. I haven't thought about these things for 40 years. Well, so we had bands like Secret Affair and Judie Tzuke. I don't know whether those translate to an American audience, but they were very contemporary bands at the time. And always the challenge of trying to take old architecture with some people who were quite protective of it and allowed it to be used for rock concerts.
Bruce Carnegie-Brown:
But when it works, it's just phenomenal in terms of environment. In fact, projecting 40 years forward, I have been for... I'm no longer, but was for five years, a trustee of Historic Royal Palaces that looks after things like the Tower of London and Hampton Court Palace, and they do a music festival at Hampton Court Palace every summer. And it's very much the same thing. You get to sit in 16th-century surroundings, but enjoy the music of today, and it's just magical to be able to blend those things.
Josh King:
I mean, all you have to do is make sure that the grass in the quad isn't permanently damaged or the mortar in the stone doesn't sort of shake the foundations.
Bruce Carnegie-Brown:
Well it was easy to protect the mortar and the stone. It was a bit harder to protect the grass. We did have to relay the lawns.
Josh King:
Talking about origins, Lloyd's began as a coffee house to significant meeting place in London for sailors, merchants and ship owners throughout the 17th and 18th centuries. One of the fabled documents that we had at Willis was the slip for the syndicate put together at Lloyd's in 1912 by Willis Faber and Company, to cover the full cost of the Titanic in the event of a total loss. Let's listen.
Speaker 8:
When the RMS Titanic went down on the 15th of April of 1912, claiming over 1500 lives, it took with it the pride and the hope of an entire city. What disappeared in just 180 minutes had taken the people of Belfast millions of man hours to build. Before construction could begin, they had to carve a vast new dock from the city's marshland. They shaped acres of steel to form a hull that they believed was unbreakable.
Josh King:
Bruce, this unbreakable hull resulted in a $5 million claim that was paid out within 30 days after the ship went down. Can you walk us through how Lloyd's moved from a simple gathering place, that coffee house, to the world's premier insurance marketplace?
Bruce Carnegie-Brown:
Well, really on the back of trade, and of course at that time, the British economy was globally dominant. And so as the British economy spread internationally, so trade spread, and of course people required more and more insurance. It started with marine, everything was transported in those days by ship, cargos and shipping formed the start of it, and then of course it's branched out from there.
Bruce Carnegie-Brown:
And it developed a reputation for innovation, but the clip you just played are, along the way, there are these seminal events that really anchor a market's ability in terms of its reputation to honor its claims in really short order. And the size of the claim you referenced, $5 million, was huge at that time in terms of the capitalization of the market, but the willingness to pay that claim unquestioned. And indeed, of course, it's a pretty black and white event, isn't it? There is no doubt about the sinking of the ship.
Bruce Carnegie-Brown:
But to pay it that quickly established Lloyd's reputation in the early 20th century. In fact, a very similar time, of course, to the San Francisco earthquake, which established Lloyd's reputation in the United States for paying all claims in that earthquake in very quick time. And so those things are important, but it's also important to be an innovator. And so we have been incredibly proud over the decades to have underwritten the first motor insurance policies, to have underwritten the first insurance satellites going into space, and most recently things like cyber risk have been pioneered at Lloyd's. And I think it is really important that we work hard to remain relevant in everything we do. It's very easy to rest on your laurels and to become less relevant over time.
Josh King:
And we're going to get into some of that relevance, like the issue of cyber, later on in our conversation, Bruce. But in the center of the room at Lloyd's sits the Lutine Bell, which was salvaged from the HMS Lutine in 1859 after that vessel ran aground on the Dutch coast. Lloyd's underwriters had insured the cargo that was on its way to Hamburg after that economy nearly collapsed from Emperor Napoleon's attacks. Let's take a quick listen to the tradition of the bell.
Speaker 9:
... and decided a few days late, but ship, crew, and cargo are safe. But arrival is reported to the shipping agent who after verifying the news, cables it to Lloyd's. In a case of such importance, the historic Lutine Bell is run, once would be for a loss, twice means that the ship is all right. The news of the ship's safe arrival at Bermuda is entered on the card in the index room.
Josh King:
Bruce, one of my favorite films of 2021 was Tom Hanks in Greyhound on Apple+, all about the convoys that made it through the black pit in World War II with the help of British, American, and Canadian destroyers in corvettes. HMS Lutine is only one example of the many customers Lloyd's has served and protected, but times are different today, as you just said. Can you tell us a little bit more about the clients that Lloyd's serves now?
Bruce Carnegie-Brown:
Well, of course we have a lot of the traditional companies coming and insuring at Lloyd's, but increasingly the value of a company is no longer made up of real property, whether it's a plant and equipment, whether it's inventories, and is made up much more of intangible things, the good will, the reputation. And the risks that companies have now are in places like supply chains rather than in factories burning down.
Bruce Carnegie-Brown:
And so the nature of the products that we're underwriting are changing to deal with those things. We have a very good partnership with some of the new economy companies out there, so if you think about... This is a very simple example and been used many times, but Uber is a taxi company that doesn't own any taxis and Airbnb is a hotel company that doesn't own any hotel rooms, the reputation risk these companies have is all about their ability to deliver what they say they're going to deliver to the people who rent the rooms or ride in the cars. And when things go wrong there, their reputations can be damaged very, very quickly.
Bruce Carnegie-Brown:
And so being in a position to pay a claim quickly, it doesn't alleviate the damage caused, but customers can be brought back on-side very quickly if you deal with the problem in a really quick way. And so we partner with companies like that to deliver cash to the customer for their claim as quickly as possible to allow them to continue to trade and to continue to build their reputations. It's very different from the idea of insuring buildings and insuring inventories and trade.
Josh King:
Renting the rooms and driving the cars is one thing, Bruce, but this is the lead of a Reuters story from just a few days ago. I'm going to quote it. "Airlines will need to negotiate Ukraine aviation cover with their insurers with some of the required war risk policies now being agreed on a daily basis," a senior Lloyd's market official said on Monday. Busy days at 1 Lime Street?
Bruce Carnegie-Brown:
Well, certainly. And effectively what we do is declare a war risk alert across a particular geography, unsurprising that that would be Ukraine at this point. And that invalidates a lot of existing insurance or requires you to have supplementary cover because clearly the risk has dramatically changed, and most airlines, of course, are re-routing away from Ukraine so it's not an issue for them. But those that want to overfly Ukraine need to have different insurance policies, so yeah. Very busy days.
Josh King:
Why is the choice of an insurance carrier and being one of the world's largest insurance marketplaces so critical to the value proposition that you provide your clients?
Bruce Carnegie-Brown:
Well, it's quite interesting. I think that a lot of people think of insurance as rather dull and a kind of cost of doing business, and they also have a confidence challenge. Will it pay when I need it to pay? If you look at it a different way around, I think it enables people to take more risk than they could otherwise take.
Bruce Carnegie-Brown:
And I often use the example of brakes on a car. Most people think brakes on a car are there to slow it down, but of course they're really there to enable the car to go faster. You would have to drive your car extraordinarily slowly not to crash it if it didn't have any brakes. And I liken that to insurance, because I think insurance allows you to take more risk than you could otherwise take. And that's why you can see it's relevance in things like flying aircraft full of 500 people around the world. If that aircraft falls out of the sky, the financial consequences of that are too huge for even large organizations like Airbus or Boeing or British Airways or American to bear.
Bruce Carnegie-Brown:
And so of course, some categories are compulsory in terms of insurance. Airlines is one of those, motor vehicles is another. And I think, again, young people, when they jump in a motor car, don't realize the risks that they're really running if something goes wrong while they're behind the wheel of the car, and it's much less about fender bending and it's much more about injuring people. And you could have a life-changing experience, not just through injury, but through the financial penalty if you didn't carry the right insurance to get in that vehicle.
Bruce Carnegie-Brown:
And so that's a very simple example of somebody being able to take more risk than they could ever afford to take on their own by purchasing insurance. And you could extract that across a whole range of issues. We have got Elon Musk firing any number of satellites into mid-Earth orbit, and a number of those went wrong on day one. He needs to be able to keep going with that project, and in order to be able to reload, insurance plays a really valuable part in his risk mitigation strategies.
Josh King:
One of the tensions, Bruce, that Lloyd's feels is one that we think about here every day at the New York Stock Exchange. And you probably saw it as you walked around our boardroom, but in an interview once, you said, and I'm going to quote you, "It's quite easy to fall in love with the history of this place, but the key issue is to make sure that you're spending more time on the future than on the past." How do you think about balancing the need for modernity while honoring the history and traditions at 1 Lime Street?
Bruce Carnegie-Brown:
I don't think they have to be mutually exclusive. I think you can have both. I mean, as you identify, we're in this New York Stock Exchange building and it has both. It is a very modern building in terms of what it needs to achieve for its customers to raise vast sums of capital in a really efficient way and to trade that capital at a very low cost for the benefit of investors. It's the same thing in insurance. There is no reason why building has to be brutally modern just because we're doing modern things, but we do have to make sure that the building is always fit for purpose.
Bruce Carnegie-Brown:
And I often talk about insurance in terms of its challenges and opportunities across three dimensions, I think, and there is a confidence, cost, and relevance, and have touched a bit on relevance in terms of innovation. Cost is a big issue. I think insurance is too expensive. It's got to be not just available, but affordable for people, and penetration rates in insurance around the world are too low. We're big natural catastrophe insurers, so we insure hurricanes going through the United States every year. And they do go through the United States every year, but kind of interestingly, less than 25% of any hurricane event, the economic hit of any hurricane is insured year in, year out.
Bruce Carnegie-Brown:
So what are we doing wrong that people aren't buying more of our product? And the cost of delivering the product, I think, is a challenge. And then the confidence piece. There is always going to have more of a challenge in insurance around confidence than, say, a banking or investment transaction, because when you shake hands on a transaction in most financial services, there is an exchange of value. And if there wasn't an equal exchange of value, the deal wouldn't happen. Now down the road, somebody might have won and somebody might have lost, but if there wasn't an equal exchange of value, the deal wouldn't happen.
Bruce Carnegie-Brown:
In insurance, you part with your premium well before you know whether you're going to have a claim, and have you wasted your money if you paid for premium and you didn't have a claim, or have you actually bought some decent risk protection? And then you have got some concerns because where bankers work to very high probabilities in their outcomes, I mean, most models are at 99.5% in terms of the probability of the outcome.
Bruce Carnegie-Brown:
In insurance, there is much more risk being taken, and the causes of those risks can be many things. And so you tend to get into a bit of a conversation when a disaster happens as to causality and whether the policy should pay in full or whether there was contributory negligence from the customer, and those kinds of issues, if you're not careful, damage confidence in whether the policy pays. But it is trying to do something truly extraordinary in terms of taking unforeseeable uncertain events off the balance sheet of individuals or companies and put it onto the balance sheet of insurers. And done well, I think it really adds capacity and capability to people to pursue the things they want to do and taking the risks they want to take, but effectively selling off the risks they don't want to take.
Josh King:
You mentioned cost of delivering the product. Before I was at Willis, I spent about five years at the Hartford Financial Services Group under Ramani Ayer. We spent a lot of time looking at our own book, at travelers, at Allstate, and all the other companies who had risk along the Eastern seaboard of the United States. Their decision was not to make it less expensive, but to actually pull out and leave and not offer the product. So bring us into the skunk works of insurance. How do you up that number from 25% coverage to something greater at a more affordable cost to people who really want to own that home along the seaboard?
Bruce Carnegie-Brown:
Well, clearly if more people buy insurance, actually the risk can be spread more broadly, and so the sum of the friction costs of the capital you have to hold can be diversified, and the capital that you then end up needing to hold is less, so that's a way of reducing cost.
Bruce Carnegie-Brown:
Some of it is just, and you referenced it in your introductory remarks, some of it's about getting out of our own way in terms of some of the manual interventions we have in our processes. And the processes can be pretty extended if we're trying to cover risks in, say, I don't know, California. You have local broker activity, you have commercial wholesale broker activity, you then have London market broker activity before the risk even gets to the underwriter. And when we're trying to process risks in a variety of currencies, covering risks in multiple jurisdictions, a lot of our settlement systems are, frankly, not as efficient as they need to be. So a big part of our investment in Lloyd's at the moment is going into taking out this cost that gets between us and a better quality of service to our customer.
Josh King:
Let's go back to 2017 and talk about taking out some of the costs. Lloyd's members and underwriters were always notoriously reliant on paper, carrying stacks of them from place to place in the room itself. One of the initiatives that you pushed for has been digitizing and making the marketplace less analog. Why was that so important?
Bruce Carnegie-Brown:
Well, first it's not a particularly secure way to transfer documentation. It's also incredibly inefficient. I had a moment of epiphany in the queue at Starbucks when the guy who has the app is able to go straight to the front of the line and pick his coffee up while I'm still standing in line to pick my coffee up. And he is advantaged and preferred in his purchase than I am, and I'm effectively pushed down the queue on his arrival.
Bruce Carnegie-Brown:
In Lloyd's, it's the other way around at the moment. The guy on the box, who comes to the box with his risk, gets attention from the underwriter and the guy who sent it in digitally has to wait until the underwriter is free. Now I need to change that logic in the minds of underwriters so that they understand that responding electronically is the preferred way of doing business.
Bruce Carnegie-Brown:
And we're kind of getting there. In fact, of course, the pandemic has accelerated that dramatically. The market was physically closed for many months over the last couple of years during the various lockdowns. And I have to say, I was very pleasantly surprised by how quickly people were able to move to remote working and continue to provide solutions to their customers and pay their customers' claims.
Josh King:
And we're going to get into that in just a minute, Bruce, but to focus in a little bit on what you were talking about on cyber earlier, many of the risks that businesses and people face today are identical to those that Lloyd's customers faced during its founding years. Cyber protection, cyber insurance, however, would have been something well beyond the comprehension of a 17th-century merchant. And yet, with war looming, US officials are warning of hacks similar to the Russian cyber attack against Ukraine in 2017. Here is Eamon Javers talking to Becky Quick of CNBC.
Eamon Javers:
It is getting weird. Becky. We saw this warning earlier in the week from the Department of Homeland Security telling infrastructure providers that Russia retains robust cyber capacity here. And the entire cyber security community is really trying to figure out exactly how this would look if Russia invades Ukraine.
Eamon Javers:
The expectation that I'm hearing from people now is that they don't expect that there would be a massive Russian cyber campaign against the United States right from the get go. They think the Russians would try to keep anything they do in the cyber realm contained to Ukraine, at least at first, but if the United States retaliates, then all bets are off.
Josh King:
Bruce, insurers might not be able to invoke active war exclusions as they did back in 2017. What do you think the ramifications are?
Bruce Carnegie-Brown:
Well, indeed, most cyber risk policies do have war risk exclusions. The challenge in the cyber world is to understand when the war has started. I mean, some would argue that it's been going on for some time because state-sponsored cyber activity has been prevalent in the economy. And so, one of the things we got to make sure is that our wording works for the risks that we are taking. The worst kind of policies we can write are where our customer thinks they're covered and they're not, or indeed, our customer is not covered and they think they should be. And that comes back to the confidence point I made before. And of course in cyber, it's all relatively new.
Bruce Carnegie-Brown:
The outcome of cyber is very recognizable. It's mostly theft of one kind or another or blackmail or block [inaudible 00:26:08]... Blocking people's systems. Those are very old-fashioned crimes in terms of the outcome, but the way it works and the dimension in which it operates and the difficulty of identifying perpetrators is much, much harder.
Bruce Carnegie-Brown:
But again, so there is some courage in the insurance industry in having taken this on initially. So without enough data, they started putting a price on this, and you have to price on it in order to start getting the data. And as you get the data, you refine your models and you become smarter at it. The other thing that happens is that for many participants, clients of the market, that when a cyber event happens, a ransomware attack, let's say, it's the first time it's happened to them. Whereas for the underwriters, they're seeing it every day of the week. And so the advice component of what you can do to mitigate the risk, the expertise that the insurance industry has around that is really valuable beyond writing checks for the losses caused. And so we are helping to share awareness of best practice and how you put the right firewalls up against these kinds of challenges and how you share the learnings and the experience so that others don't suffer from the same challenges.
Bruce Carnegie-Brown:
But this is an iterative and ongoing process. We think we underwrite about 25% of all cyber premiums in the Lloyd's market today, so we are very much at the forefront of the growth of that market. In absolute terms, it's still not huge. It is growing. It's our fastest-growing line of business, and you would expect that if we're moving to a more digital economy from a more physical economy over time.
Bruce Carnegie-Brown:
Interestingly, almost 90% of it is bought by US corporations, so the rest of the world has not really woken up to the risks that it faces in the world of cyber. And actually, of course it has, as implied by your clip, there is a systemic issue to this too, right? So governments need to be fully engaged as much as they have been in the pandemic around how we manage through those risks.
Josh King:
Turning from the complicated question of when a war actually begins to the more day-in, day-out work of managing risks across the globe, the Wall Street Journal, Bruce, reported that insurers across the world are increasing their investment in things like drones and robots to help claim adjusters evaluate storm damage, while AI and machine learning are helping them understand the risks that exist before they actually provide a quote. How is technology changing the insurance marketplace?
Bruce Carnegie-Brown:
Well, so a large part of what you have just identified is really creating a better experience for a customer. So if you take a flood in a particular place, particularly if it's a widespread natural catastrophe flood, the first problem you have is you can't get to the site that you're insuring in order to be able to assess the damage. The second problem that you have is that all the loss adjusters that you need to do this are pretty busy, and so there... You end up with a kind of queue to get issues sorted.
Bruce Carnegie-Brown:
Well, if you can fly a drone straight over the top and see that the house is underwater or the factory has to be closed for flooding, you can pay that claim really quickly. And so, as we look at using satellite technology around things like weather, that's pretty powerful for anticipating where problems are going to occur and putting ourselves on notice that there is likely to be claims coming in this space. In some cases, we have even had examples of where we have been telling the policy holder they should be getting out of their burger joint or whatever it is because there's something going to be knocking on the door pretty quickly that is pretty unpleasant. So get in your vehicle and leave the area because we're tracking all of this satellite imagery to try to be as responsive to our customer's needs as we can be.
Bruce Carnegie-Brown:
And I think that's a pretty exciting development for insurance. And frankly, it's also necessary because back to this issue of fulfilling the promise that you make to the customer and making sure that the policy is relevant and the customer is satisfied. And actually back to your Titanic example and my example of the San Francisco earthquake, when you have a disaster, it's actually a moment of opportunity for the insurance industry to show its best ability to help customers go through this unbelievably difficult period and put them back on their feet as quickly as possible.
Josh King:
And then a drone can give you certain information from an altitude of 200 feet, a satellite can give you information from an altitude of 200 miles. And yet there's also technology inside some of the things that you're insuring as well, trucks and vehicles that provide the telemetry and data that you never could have imagined just by measuring tire tracks on a skid going off the road.
Bruce Carnegie-Brown:
Well, so a very relevant recent example would be transportation of the vaccines to emerging-market countries. And particularly things like the Pfizer vaccine that have to be transported at very low temperatures consistently, if you're starting to export those to the middle of an equatorial zone, there is a lot of risk in that container, that the ship is going to go through periods where the weather could heat up the product inside, for instance. So we are putting sensors in these containers that allow us to monitor them in real time and anticipate if there's going to be a problem.
Bruce Carnegie-Brown:
And so the benefit of that is that more of the product ends up in the hands of the customer, but also from a risk management point of view, we understand more directly when that hasn't happened and when some of the product is spoiled and a claim has to be paid. So I think it's a benefit both to the underwriter in terms of their management to the risk, but also to the customer in terms of making sure that their products get delivered in the way that they want them received.
Josh King:
Bruce, Lloyd's recently announced that the Ontario Teachers Pension Fund Board, Canada's largest pension fund, would invest in Lloyd's' London Bank risk-protected cell company. Tell us a little bit about this program and why the Ontario teachers chose to work with Lloyd's?
Bruce Carnegie-Brown:
Well, what we're trying to do more broadly at Lloyd's is make ourselves attractive to what we would describe as nontraditional capital. So typically our capital comes either from individuals, that's frankly today, less than 10%. It used to be 100% of the market if you go back a 100 years. But the other 90% today comes from traditional insurance businesses that have mostly businesses outside Lloyd's, as well as inside Lloyd's.
Bruce Carnegie-Brown:
But because we're a marketplace and unique in that amongst global insurance centers, we believe we can also be attractive to more traditional fixed-income kind of capital, looking for an uncorrelated return. So insurance risks are not correlated to bond returns or equity returns, and so there is a developing interest in financial capital investing in insurance risk. And that used to be a huge black box that they were terrified of. But actually, again, with greater predictability, offering them lines of business that are more predictable in terms of their outcomes where the data supports the predictability of the outcome, or even where they take a fairly remote position in the insurance, so they're not insuring the first or second or third losses of these things, but insuring some exceptional loss, which has a very low probability of happening. We can then bring new capital into the market and it comes back to the point we were talking about earlier about making the cost of the product cheaper to the customer, but also, of course, finding alternative sources of investment for Ontario teachers and others.
Josh King:
After the break, Bruce Carnegie-Brown, Chairman of Lloyd's, and I will dive deeper into some of the opportunities that Lloyd's is pursuing, the need for insurance to act on the climate emergency, and what to expect from Lloyd's' future. That is all coming up right after this.
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Josh King:
Welcome back. Before the break, Bruce Carnegie-Brown, Chairman of Lloyd's and I were discussing his career, the history of Lloyd's of London, and how he is embracing a more digital future. Bruce, Lloyd's finished last year with some remarkable results. The Financial Times reported that the aggregate pre-tax profit at Lloyd's was 1.4 billion pounds for the first half of 2021. What's driving that growth, and how are you thinking about making sure that it's sustainable?
Bruce Carnegie-Brown:
Well, we have had a three-pointed strategy for some time at Lloyd's now, and I think there is a real virtue and consistency around that. The first has been around performance, and in truth, Lloyd's four or five years ago was an underperformer against its peers in the marketplace, so we were underwriting poor risks, we were giving capacity to underwriters who are not making decent returns on their capital.
Bruce Carnegie-Brown:
And what we do at Lloyd's is aggregate all of those results in the numbers that you talk about, and while we have world-class underwriting syndicates at Lloyd's, we had a whole bunch of underperforming syndicates that were dragging the averages down. And so we have had a four-year program really of starving the underperformers of an ability to increase their capital at Lloyd's and reallocating that capital capacity to the outperformers, and it's, frankly, beginning to come through.
Bruce Carnegie-Brown:
So 2021 was not a particularly a good year for low claims. Often, we have good results because there are just low claims, and for Lloyd's, that is disproportionately around natural catastrophe events. In fact, 2021 was a very full year of natural catastrophe events. It wasn't an excessive year, but it was a very full year. So the fundamental improvement in the attritional ratio, which is the expected loss on the most frequent claims that we have, has been dramatically better in '21 than it was in '20 and in the years previously. Now we can always still get knocked off course because, in 2020, we produced huge losses as a result of pandemic claims, for instance, and so it is reasonably unpredictable in that sense. But what we have been trying to do is to get the underpinnings of performance in the marketplace to a more consistent place.
Bruce Carnegie-Brown:
And of course, if you outperform your competitors, you begin to attract more capital into the marketplace and we can begin to grow faster. And I certainly think that having constrained the growth of the market while we tried to repurpose its performance in recent years, we're now in a position where I believe we have kind of earned the right to grow again, and so we are investing behind that.
Bruce Carnegie-Brown:
Now that has also coincided with some firming of pricing in the insurance market. Now, no one insurance market is able to drive pricing. It's a sufficiently big marketplace, but market pricing had been coming down pretty much across all lines of businesses pretty consistently for the best part of a decade and a half, maybe even two decades. And what has happened is more and more insurance underwriters and their investors, more particularly, were beginning to experience consistently poor returns on their capital, and so market pricing has been creeping up.
Bruce Carnegie-Brown:
You then get certain specific events that cause things to spike in terms of the pricing for capacity that's out there. It's unsurprising that things like directors and officers in insurance becomes more expensive after you have calamitous issues like the pandemic, when people start suing companies for mismanaging their way through the pandemic, unsurprising that cyber crime is on the increase. I think there is also a growing realization that where... The positive thing about insurance is that it kind of reprices annually, so if you have got the price wrong, you're able to have another crack at it, but if you're going... What you're typically doing is using long data sets, particularly when you're talking about things like natural catastrophes, because we're not really interested in adjusting for a weather event. We're interested in adjusting for climate and understanding the difference between that... Between those two things is frankly quite difficult, but necessarily that's linear.
Bruce Carnegie-Brown:
Now, if something is happening exponentially in the environment, for instance, which it may well be, then you're always going to be behind the curve even as you reprice, and that's a big challenge for us. So on performance, I think we have done a really good job over the last four years. You were quite generous in your comments around digitization. I would say that's still got a way to go. We have done the early steps. Some of it is really quite heavy lifting. It's about who your partners are that provide the technology into the marketplace and what flexibility you have to move away from them to move to other sources of technology. But I am hoping that 2022 and 2023 will begin to deliver some really quite meaningful changes to the user experience, so whether it's a broker or an underwriter in the market in terms of their engagement with the market, that will also have a really beneficial impact on costs that then will feed through to customers.
Bruce Carnegie-Brown:
And then the third leg of the strategy is around culture. So we have to work harder to make... Insurance, generally, frankly, has a global industry, but Lloyd's specifically a more welcoming place to people from more diverse backgrounds. And you see that imperative across industries, across countries, and we have wanted to embrace that. It started in the area of gender, making sure more women were reaching senior positions in the marketplace. It's moved into an ethnicity space. So we also at Lloyd's have a slavery challenge. Any institution that's been around for 330 years has history that dates back into events of those... Of that kind, and undoubtedly Lloyd's was providing insurance of cargos, as they were called, crossing the Atlantic, and some of those cargos were slaves going from Africa to the Caribbean and the American plantations.
Bruce Carnegie-Brown:
And again, how we're trying to address that is to tell our whole story. People typically want to tell the good stories about themselves. And I think one of the learnings many of us have had, and Lloyd's is no exception, is the need to share our whole history, the good and the bad of it. And in sharing the bad, to recognize the changes that we need to make. And that's beginning to inform our ability to think about how we attract people from ethnic minority backgrounds into the marketplace, and some of the signals we send off that make ourselves less attractive, where people don't think they're even welcome, let alone could do well in the marketplace. So culture has been a big part of this for us as well.
Josh King:
We described the scene in the underwriting room where the traditional brokers would bring their stacks of paper to put their syndicates together, versus those that were operating more digitally and had to get to the back of the queue. But as a result of the pandemic, I mean, you were on station in March of 2020 and saw the doors of 1 Lime Street getting closed off for a while. How did the business actually adapt and react to what was going on?
Bruce Carnegie-Brown:
Well, I think the truth is that the business has been more digital for longer than people believe. So, although there is a physical marketplace that people come into, they're typically negotiating the transaction physically. The actual execution of the transaction was being done digitally. Not in a terribly sophisticated way. I mean, a package of email activity moving into Lloyd's settlement systems, but that meant the actual settlement of trades was never affected by the pandemic.
Bruce Carnegie-Brown:
So what had to happen was people needed to move online to do their negotiating. And frankly, it's probably true that helped the underwriters because with the brokers, as you well know from your own background, are silver tongued in their salesmanship. They're pretty good at persuading underwriters to take risks, and they found it much harder in the lockdown to sell their poor risks because the underwriter could end the Zoom call without impact.
Josh King:
Earlier this week, Bruce, Prime Minister Boris Johnson announced, finally, the end of COVID restrictions in England. What lessons have you taken away from the pandemic and has it fundamentally changed how Lloyd's does business?
Bruce Carnegie-Brown:
No. It hasn't changed fundamentally the way Lloyd's does business. As you referenced in your introductory remarks, this is all about evaluating risk. And one of the problems with the pandemic is that, of course, nobody knew what the risk was in the beginning, and they understood it was viral. The death rates, the hospitalization rates were increasingly high. And one of the things... Great things about insurance theoretically, is that you diversify. So when we underwrite earthquake risk in Tokyo and in San Francisco, we don't expect both those events to happen at the same time. And so, in a sense, it's hedged. The problem with the pandemic, it was everywhere at the same time. And so it was definitely a systemic risk that was beyond the ability of the insurance companies and the insurance industry on its own to meet, and we should come back to that.
Bruce Carnegie-Brown:
But what happened is with the onset of the antigens and the antiviral solutions, was that it becomes predictable again. And as we know about viruses with each [inaudible 00:41:52] mutation, they tend to get weaker, even though they may get more widespread and you're building immunity in. And so once you can get back to modeling, you can get back to business. So, in the early part of the virus, we paid out very large claims at Lloyd's. We paid nearly 10 billion of claims in 2020. The issues were a lot smaller in 2021, sometimes because cover had been withdrawn, sometimes because pricing had been adjusted, but also because events were reopening with people having been vaccinated.
Bruce Carnegie-Brown:
But the other overlay on this was the unpredictability of government action. So again, you can't model for a decision by a UK prime minister to lock down or to un-lock down. And some of these things were quite politically driven rather than being driven by the data, and notwithstanding the fact that people claimed to be following the evidence. And if you're determined to keep the country open through Christmas so everyone can enjoy their holidays, you are taking a risk on what happens post-Christmas in terms of people's health.
Bruce Carnegie-Brown:
I think it's reasonable to say that insurance finds it difficult to respond in those circumstances, but with the advent of vaccination, it's now much more predictable in terms of the outcomes. And so we have been working, for instance, one of our big lines of business very heavily affected in the pandemic is event risk, cancellation, effectively, mostly for big outdoor events, but also big indoor events. And of course, a lot of those canceled football stadiums and things is not able to have paying audiences.
Bruce Carnegie-Brown:
And it's a meaningful part of the economy and a meaningful part of people's social lives to engage in those activities. Well, we had to partner with, in the UK case, with the UK government to reopen that market and effectively took a first loss provision into the insurance market, but a higher-than-expected provision was taken on by the government. And what will happen over time is we will keep building that first loss until the government can kind of exit its provision of support.
Bruce Carnegie-Brown:
And that gets to another part of your question, which is that we need to be having a partnership between the private sector and government around systemic risks, and I would identify three. I think the pandemic is clearly one, cyber risk is clearly another, I think climate is a third. And again, the simple example on the pandemic is that the total resources available to the non-life, the P&C insurance industry globally, to pay everything in terms of its claims is about $2 trillion.
Bruce Carnegie-Brown:
This is your house getting broken into, not just pandemic risks, $2 trillion. In 2020 alone, governments injected $14 trillion into their economies to try to support them through the pandemic, and so there is no way the insurance industry could have paid that bill, so you need to have partnership for these kinds of things. And the problem is that governments are always looking backwards. Governments never have any money, and they're always swamped by the things that are immediately in front of them.
Bruce Carnegie-Brown:
And so we have produced a more recent paper on how we build more resilience back into governments' ways of working and protecting citizens from pandemic and other systemic risk events. It's hard getting traction on those conversations. And of course, part of it requires government to be doing something, and as I say, governments are pretty busy at the moment for perfectly understandable reasons. So I worry a little bit that we're not learning the lessons that we need to from this.
Josh King:
Governments are very busy for understandable reasons, Bruce. And yet, here you are two years after the pandemic set in, trying to reestablish these trans-Atlantic bonds that have, for various reasons, gone astray over 24 months. The US and the UK have a common history, common language, and long relied on their special relationship.
Josh King:
And part of our shared economy requires that these two countries align their regulatory priorities in the financial services, or at least ensure that they are interoperable. How should we think about deepening the transatlantic relationships? And do you think you'll accomplish any of that this week, while you're here in New York?
Bruce Carnegie-Brown:
Well, we can set the conversation going. It's difficult to get heard on all of these issues when President Putin is making a big noise somewhere else. As you know, when you're talking about agreements between countries, these things often take longer. I'm kind of a tactical guy. I would rather take a tactical approach to finding a problem and providing a solution. I think anytime you get involved in boil-the-ocean kinds of issues, you get bogged down forever in them. But there are a number of things that we're looking at around things like the free flow of data, the transferability of skills through mutual recognition of qualifications between the US and the UK, that would be easy things. They don't cost the government money to do, but they would take friction out and provide opportunity to individuals.
Bruce Carnegie-Brown:
And the big underpin to this needs to be how we protect financial centers like New York and London from challenge from other places, have them be the center of expertise in everything that we do. And then actually, beyond protecting it, how to grow our opportunity. And there are a bunch of new opportunities out there. When you work in insurance, you end up spending a lot of time focusing on the risks. But you think about the other side of climate change taking you into green financing and the whole infrastructure that's needed for the green revolution, and there is huge opportunity there if we get it right.
Bruce Carnegie-Brown:
And because climate change is a relatively new thing, neither the UK nor the US are particularly entrenched in a particular view, which is always hard to change who is going to give in that conversation. So why can't we agree protocols together that would create standards that underpin the way we work together? And frankly, I would be ambitious enough to say that if we did that between the US and the UK, we ought to be able to be ambitious enough to say that the rest of the world would follow too. And so there is a real opportunity, I think, to seize the timing of this between the US and the UK, but it takes more than one flying visit to make that a reality.
Josh King:
Yeah, I know. I referenced this conversation that we had with Mark Carney earlier on in our conversation. Lloyd's has also been aligning itself with the UN Sustainable Development Goals and the Paris Climate Goals. And after 2022, you announced on CNBC that Lloyd's would not be underwriting new risks in certain businesses, including Arctic drilling, oil sands and thermal coal. What role does the insurance market play, do you think, in the energy transition?
Bruce Carnegie-Brown:
So we are very big underwriters of energy risk, and particularly cost project financing risk is a role in which the insurance industry plays in order to enable project financings to get bank financing for their projects. My view is that we bookended this as a result of COP26. Everyone is aligned around net zero for 2050, and everyone has done the relatively easy things upfront, so looked at their own scope one emissions, so what is my own footprint in the Lime Street building, and how do I reduce the impact? But for professional and financial services businesses, that impact is not that high, right? So you start in a relatively advantaged position.
Bruce Carnegie-Brown:
The meaty piece is how we support our customers going through transition, and what does that really mean? So again, on coal, for instance, it's pretty straightforward. I don't know the statistics for the US, but in the UK and France, it's less than 2% of the energy supply chain. On many days of the week in the UK, it's zero in terms of coal coming into the electricity supply chain, but in a place like Poland, it's 60%.
Bruce Carnegie-Brown:
So we have got to have a nuanced approach to this in order to allow people to transition. And it's equally true that when we get to insure an oil major, we don't get to insure the good bit of an oil major and not the bad bit of an oil major. And so you could cancel the oil major and say, "We're not going to underwrite it," but you ought to recognize that many of those oil majors are the same people investing a lot in new technologies because they understand they need to transform their own business models into a lower-carbon model.
Bruce Carnegie-Brown:
And so I think in common with most financial and professional services, we have made the statement we want to support our customers going through that transition, but the key issue becomes are you really transitioning? And so you get into all of these conversations about greenwashing and the like, and I think there is still a shortage of really good measurement tools.
Bruce Carnegie-Brown:
There are lots of people thinking about them, and at one end, it's kind of a traffic light like you have on your cereal bar as to how much sugar or salt it has in it, which is probably overly simplistic. On the other hand, you have got some quite sophisticated insurance companies trying to look at the embedded value in their capital of climate change risk, and I think people's eyes glaze over the way they do around pension accounting, and it's not understandable to the person in the street. And we have got to somewhere in the middle, which is probably not perfect, but gives us a place to benchmark where we are and then to show progress in terms of where we need to get to.
Bruce Carnegie-Brown:
And coal is relatively easy, but you start getting into oil and gas, and you switch that off and you might as well switch the lights off tomorrow. It is so fundamentally important to the global economy in all parts of the globe. And so are we going to have to nuance between relatively good gas and relatively bad gas and relatively good oil and relatively bad oil? And how quickly can we move away from those sources of energy? And what do you count in that? Clearly getting a barrel of oil out of the ground in Saudi Arabia is a lot, lot cheaper than getting a barrel of oil out of the North Sea. But if it then has to be transported 5000 miles to get somewhere, how are you factoring that cost in? So you can see how the complexity builds around this.
Bruce Carnegie-Brown:
I think, certainly, I would say, the UK, I would say certainly personally for Lloyd's, we're in a place of acceptance that this is an issue that has to be addressed, and we are going to move imperfectly along that transition model to make sure we get to net zero. And of course, as the operator of a market, we can encourage the market to take responsible steps. And those pressures are coming, not just from regulators and governments, frankly, but from... Also from our customers, because we are in their supply chains. And as they start looking at their scope three emissions, they start asking us questions about our responsible behaviors in this space. And so I think there is a positive flywheel developing there, but I think we're slightly still grappling in the dark around the measurements for this. And if we could get some decent, objective measurements, it would powerfully help the argument.
Josh King:
Part of your agenda in New York this week, Bruce, is looking at this post-Brexit world. The UK's exit from the European Union created a lot of opportunities to review the laws that govern both your country and ours, and Prime Minister Johnson began outlining how to loosen several regulatory requirements. How is Lloyd's approaching the changing regulatory environment and life in Britain as a post-Brexit organization?
Bruce Carnegie-Brown:
So we have had to make some adjustments to the way we operate in continental Europe, so we had to create a subsidiary that remained with... Inside the European Union. We don't do that lightly because we like the mutualization of all of our risk in London, and that operates in the rest of the world very satisfactorily. And so the creating of a subsidiary that is eligible to write business in the European Union was certainly a relatively important event for us, and we move in at relative speed to get it set up.
Bruce Carnegie-Brown:
My sense generally is that people are kind of beyond that now. There are still some uncertainties, and the real challenge is that the uncertainties continued for too long. We had the vote, then we had endless negotiations, and then even when we finished negotiating, there were sort of exemptions that extended for a period of time as people began to understand some of the issues.
Bruce Carnegie-Brown:
And I think what financial markets of all kinds, including insurance, need is as much certainty as they can get. And then they're smart enough to be able to work with that certainty and to work around some of the challenges that are created. And I think we're getting to that place now, frankly. There will be bumps and the politics of this stuff is difficult, but I think that the essential model of Lloyd's has not changed through this. And indeed, we're in part a little bit lucky that we actually are underweight in continental Europe relative to our exposure. So more than 50% of our revenues, as you know, come from North America, for instance, which is a much bigger weighting than the US presence in the global economy, so we suffer less from risk on our business in Europe than other organizations might.
Josh King:
On February 20th, Bruce, you closed applications for the newest cohort of Lloyd's Lab, this award-winning space dedicated to accelerating, fostering new products to help find new solutions for your customers across the world. Can you tell us more about this accelerator program and Lloyd's Lab?
Bruce Carnegie-Brown:
Yeah. So I'm a big fan of the Lloyd's Lab. It's been going about three years now. We have about four cohorts in a year. They come in for between 10 and 12 weeks at a time, and there about 10 insurtech businesses that come with each cohort. And they do two things, really. Some of this is for our benefit. They bring new technology and new ideas into the market and help the scales fall from the eyes of some of the more traditional underwriters as to what's possible out there. And of course, what they see in us is the opportunity to access an entire market. And so we buddy them up with brokers and underwriters in the marketplace so they can sell their ideas in the 12 weeks that they're with us. And then of course, as they... As their ideas begin to turn into a business model, they then start looking for capital to support them, and many of the capital providers are indeed insurance companies because these are insurance products.
Bruce Carnegie-Brown:
And so, there is a huge win-win in this for bringing new talent and new ideas into the insurance industry and specifically into the Lloyd's market, but also in us being able to accelerate the scaling of their opportunities. And we have had some really quite good successes out there. One that I love is a business called Flood Flash, and it's a parametric insurer. So back to trying to make the product a more confident product, a more cost-effective product and a more relevant product, essentially the policy holder buys a policy where there is a sensor, and let's say it's a river flooding, you set effectively the parameter for the tolerance you're willing to have on the rising of that river. And above that flooding, we just pay a check.
Bruce Carnegie-Brown:
We don't come and ask whether your building got flooded or not. We should, if we have done it correctly, should have been able to price the predictability of the river rising that far. And therefore, as soon as that parameter is hit, the customer gets a check, and you can see why that takes out a huge part of the cost and the time delay that you get in those kinds of products. So that business started as a Lloyd's Lab cohort, one of the early cohorts, one or two, it then raised capital and insurance capacity support from the Lloyd's insurance market, and is now a coverholder of Lloyd's, and we are seeing it expand dramatically, and that's just a wonderful thing to be part of. It's a win-win for everybody.
Josh King:
Talking about wonderful things to be part of, and as we wrap up here, Bruce, amid all the conflict our world is facing, a little bit of hope. Here is Sarah Fane who used to run Afghan Connection, building schools and cricket pitches in Afghanistan.
Sarah Fane:
I have worked in Afghanistan for much of my life and grown a deep love and respect for its courageous people. Having been involved in the rise of cricket there through my former charity, Afghan Connection, which received backing from MCC, I understand the deep passion with which the game is held and how it has brought joy and hope to the people of Afghanistan.
Sarah Fane:
As the tragic events of August 2021 unfolded and the Taliban took control of Afghanistan, I and my team became determined to do all we could to support those arriving in this country as refugees, leaving behind everything they knew and loved, often fleeing in fear of their lives. Cricket seemed the ideal way to embrace them and welcome them to the UK, to support integration and to help them to recover from the trauma of conflict and loss. And where better to do this than the home of cricket?
Josh King:
Bruce, you retweeted the work of the Marylebone Cricket Club and Sarah's effort. It won't turn back the Russian tanks at the board of Ukraine, but how can cricket help heal the world?
Bruce Carnegie-Brown:
Well, I think sport has a huge healing capacity wherever it's played, and cricket of course is incredibly diverse. And countries like India and Pakistan, now Afghanistan, play it. We have got countries like Ireland and the Netherlands aspiring to play it. And so it's moved well beyond its traditional boundaries of England, South Africa, and Australia, which is very exciting.
Bruce Carnegie-Brown:
And I mean, Sarah is an extraordinary person. We're very lucky that she came to us to become Chief Executive of the MCC Foundation after she finished with her work directly in Afghanistan. And of course, in a sense that work has now pursued her into the UK with all the refugees that the UK has taken in. And there seems to be something in the Afghan psyche where they have really taken cricket to heart, in a way that Americans find very difficult for instance, and embraced it.
Bruce Carnegie-Brown:
And so we run these programs in the indoor cricket school at Lord's for refugees that are holed up in hotels around Lord's. And it's their way, not only of getting out of those hotels, but also getting into the community and, frankly, just having some fun, but becoming part of this new culture that they are going to end up living in. And it is a tremendous project. I would just love to do 10 times as much of it as we do, do.
Josh King:
Bruce, from the Titanic and the San Francisco earthquake in 1912, to the rapidly evolving world of cyber risk and sensors and flood flash, thank you so much for spending part of your trip to New York here at the New York Stock Exchange and bringing us up-to-date on what's happening at the world of Lloyd's. Thanks for joining us inside the [SS 00:57:43].
Bruce Carnegie-Brown:
Josh, it's been a pleasure. Thank you for having me.
Josh King:
And that is our conversation for this week. Our guest was Bruce Carnegie-Brown, Chairman of Lloyd's of London. If you like what you heard, please rate us on iTunes so other folks know where to find us. If you have got a comment or question you would like one of our experts to tackle on a future show, email us [email protected] or tweet us at ICE House Podcast. Our show is produced by [Stephan Caprile 00:58:08] with production assistance from Pete Asch, [Ken Abel 00:58:10], and [Ian Wolf 00:58:12]. I'm Josh King, your host, signing off from the library of the New York Stock Exchange. Thanks for listening. Talk to you next week.
Speaker 1:
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