Lloyd’s held its fifth “Annual City Dinner” on Wednesday night, Sept. 5. A cross section of business and government leaders in attendance heard from Lloyd’s Chairman Lord Levene and the Secretary General of NATO Jaap de Hoop Scheffer.
In his speech Lord Levene reviewed the progress Lloyd’s has made recently, including the market’s record financial performance, the transfer of its Equitas liabilities to Berkshire Hathaway, the opening of Lloyd’s China Reinsurance Company Limited and the ongoing modernization of Lloyd’s infrastructure.
Levene stressed the importance of London’s financial services sector to the UK economy, noting that it “now represents 9.4 per cent of total UK GDP, up from 5.5 per cent in 2001.” The insurance industry is “a major component,” of which “Lloyd’s itself represents over half of London market business.”
He cited a recent article published in the US, which predicted that “if Paris was the capital of the 19th century and New York of the 20th, London is shaping up to be the capital of this one. In the financial arena, ‘New York versus London’ has certainly become a hot debate. But although it’s great news that the City is booming, to me the question of who is ‘number one’ is something of a red herring. In this increasingly interconnected economy, a strong New York can only be good for London and vice versa. The financial markets are learning this again right now as the impact of sub-prime lending in the US unfolds.”
In that context Levene went on to discuss the increasingly globalized nature of the financial services industry in general and the insurance industry in particular. He also noted the rise of dependence on technology with its inherent risks, and the ever-present threat posed by global terrorists.
Levene then introduced NATO Secretary General Jaap de Hoop Scheffer of the Netherlands, who noted that “Like Lloyd’s, NATO is in the insurance business. Like Lloyd’s, we spend a lot of time assessing global risks – political, military, even environmental. We invest heavily in diminishing risk, for Allies but also for our global partners. And, like with Lloyd’s, when disaster does strike, somewhere in the world, often the first call is made to NATO to deal with the consequences.”
Scheffer went on to discuss the international threats posed by terrorism and drugs, which NATO is now involved in combating. He cited the possibility that NATO could increase the use of naval patrols to better assure “maritime security,” particularly for tankers on which much of the developed world depends for its energy supplies.
Cyber threats, most recently exemplified by hackers in Estonia, and the proliferation of missiles and other arms are also a priority for NATO. “My bottom line is this,” Scheffer continued. There is a growing threat from missiles – look at Iran. In fact, in the last thirty years, the number of countries possessing ballistic missiles has almost tripled. We simply cannot afford not to have a discussion about missile defense – amongst Allies, and with the Russians too. The Cold War is long over. We shouldn’t be hobbled by Cold War thinking when it comes to this issue. In all these ways – through constant consultation between Europe and North America; pro-active military operations; and new defenses and against new threats – NATO is helping to maintain the stable, predictable international environment you need to do business.”
In concluding his remarks Scheffer quoted a former British Prime Minister’s declaration: “I’m an optimist, but I carry an umbrella.” In a nod to Lloyd’s, he then said that for “many, many people, Lloyd’s is their umbrella. In a sense, I see NATO, too, as an umbrella: for the people of this country, of all the 26 Allies, and for the international community more broadly. One that we need more than ever, in this very challenging new century.”
The full text of both speeches may be obtained on the Lloyd’s web site at: www.lloyds.com
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