John Neal takes on ‘toughest job in industry’ as CEO of Lloyd’s

John Neal is “as good a bet as any” to take on the “toughest job in insurance” according to market observers speaking in reaction to the revelation just before the Monte Carlo Rendez-Vous that he will take the reins at Lloyd’s.

The former boss of QBE will take over from Inga Beale, who has been in the role since 2014, on October 15. Bruce Carnegie-Brown, chairman of Lloyd’s, said Neal’s immediate priority will be the launch of its Brussels subsidiary ahead of Brexit—and a wider focus on achieving sustainable profitability.

Neal’s whole career has been associated with the Lloyd’s market, first as an underwriter and later as CEO of the Ensign Managing Agency. He was most recently group CEO of QBE but left the job last year after a profit warning.

Market observers have broadly reacted to the appointment positively—but some have also warned that it will be a tough job and could be a thankless task.

“John is an exceptionally hard-working and focused insurance and reinsurance practitioner. His work and initiatives within the QBE Group in London were very successful and recognised by his being appointed to the CEO role.

“He will recognise the value and history of Lloyd’s and be very aware of current and future challenges,” said John Warwick, partner at ILS Capital Management and who worked in QBE’s Lloyd’s syndicate for 11 years.

Industry veteran Stephen Catlin added: “The market is facing many challenges. Taking the reins there must be the toughest job in insurance right now.”

Neal joins the market at what could be a pivotal point in its history. It is in the middle of a profitability review, which could force many syndicates to fundamentally change their business plans and exit some lines of business altogether.

He must also oversee what could be a tricky transition to a new regulatory landscape post Brexit, and fundamental changes driven by technology as it looks to modernise—all while cutting costs and trying to make the market more cost-efficient for the carriers operating there.

Big challenges

Neal is no stranger to major challenges. His role at QBE also represented a monumental turnaround task, although it eventually proved too much. He departed in September 2017 after the company was forced to issue a profit warning on emerging markets claims.

It said that “significantly higher than expected claims activity during the first five months of the year in emerging markets” would hit its interim and full year results.

QBE reported a net loss of $1.25 billion for 2017 driven by record catastrophes in the second half of 2017 together with deterioration in its emerging markets businesses and two significant non-cash items.

His position at QBE was also made more unstable because he failed to disclose an office romance to the board. His bonus was heavily slashed because of the incident.

However, some observers claim that the QBE job was an impossible task. “The CEO role was a hospital pass; I don’t believe anyone could fix or have fixed the (continuing) problems in QBE around the world. He gave it his best shot before being sacrificed,” one source said. A hospital pass is a rugby reference (Neal’s passion) to when a player is passed the ball just as they are hit hard by an opposing player.

Another observer added: “He is as good a bet as anyone right now. It is a big job.”

Carnegie-Brown said of Neal: “His wealth of experience both at Lloyd’s and internationally, including the US, will bring new insights and fresh thinking at a challenging time for the global insurance industry.

“John will continue Lloyd’s focus on delivering sustainable profitability, through a combination of underwriting discipline and market modernisation. An immediate priority will be the successful launch of Lloyd’s Brussels subsidiary which will enable Lloyd’s to continue serving its customers in the European Economic Area after Brexit.”

Commenting on his appointment, Neal said: “I am thrilled to be offered the opportunity to lead Lloyd’s, and will do so with the same excitement I felt when I first stepped into the Underwriting Room back in 1985.

“The insurance sector is facing many challenges. For 330 years the Lloyd’s market has demonstrated its ability to innovate and adapt, and I look forward to playing my part to ensure this unique marketplace remains at the forefront of global commercial corporate and specialty insurance and reinsurance.”

At the time of going to press, Lloyd’s had not responded to requests for interviews relating to this article.