What were the defining moments that shaped the insurance market in 2025?
In a bonus episode of Behind the Headlines, Insurance Insider's Editor at Large Adam McNestrie provides his unparallelled insight into what he sees as the key developments influencing the sector.
The changing of the guard at Lloyd's, Howden's ambitious launch into the US market, and a breakneck cycle of carrier M&A transactions are all on the agenda.
Tune in to hear the perspective of a journalist who has occupied a front row seat breaking news on all of these subjects.
Transcript (Please note that this transcript has been computer generated and therefore may contain inaccuracies and grammar errors. Thank you.)
Sam Casey: 0:04: Hello and welcome to a bonus festive edition of Behind the Headlines, brought to you by Insurance Insider. If the hospitalies of Lime Street are anything to go by, then it's Christmas party season, and in the meantime, we are hurtling towards the Warmorn Renewals in the midst of what is, by all accounts, a softening market. But we're going to pump that on the side for today and take the opportunity to look back at 2025 and the themes and stories that have shaped the year. To do so, I'm delighted to be joined by Insurance Insider's editor at large, Adam McNestry. Adam, thanks for coming on.
Adam McNestrie: Hi Sam. Happy to be here.
Sam Casey: Adam, you kicked off the year with a suitably headline-grabbing revelation about Lloyd's with your report about John Neil, the CEO who was departing for a role at Ailm in their reinsurance unit. And this precipitated a saga around Lloyd's and Neil himself, actually, which is playing out to this day. To kick things off, was it a surprise that Neil exited? And what sort of issues did it create for Lloyd's as they thought about their succession planning?
Adam McNestrie: 1:08I don't think for people who were really close to Lloyd's and the corporation that it was a massive surprise. You know, there had been hints that John had his eyes open on other opportunities. I think there was a feeling that the run of play was going against him a little bit. And so I think while it shocked people who were a little bit further away from things, I think those who I think insiders had a sense that that could happen and that he was waiting for the right opportunity to become available before he made a move. In terms of the implications and the things that it set off, it was definitely unhelpful for lawyers. You know, they were, they were already trying to manage quite an awkward series of successions. You know, they had the chairman's succession, ultimately to Charles Roxborough from Bruce Carnegie Brown. Burkard Keyser was on the 17th hole of his lawyer's career, the CFO. And so already there was going to be a lot of change at the top of the corporation. And John, I think, was actually supposed to be the point of continuity to get them through to something like 2027 or even 2028. Obviously, that didn't come to pass.
Sam Casey: 2:15And what was your feeling about what the market was looking for as a successor? I remember we were canvassing about it extensively, and there are a couple of schools of thought really. There was some who really wanted a market person who had their finger on the pulse of the underwriting, given where we are in the market. But some people were more left field and said actually the big challenge for Lloyd still is getting the tech piece sorted, finishing Blueprint too. And it was an opportunity to explore both those angles with a blank sheet.
Adam McNestrie: 2:46That's always a debate that goes on when you have a the sort of the Lloyd CEO succession being worked on. You know, some people are going to want a much more kind of expansive sort of CEO who therefore has to have like deep market experience, underwriting knowledge of the market, network. And then others are going to say, actually, we'd like a small Lloyd's, you know, small but perfectly formed. And therefore, what we want is somebody who's going to come in, who's a technologist, who's going to be able to finally get the pipes uh working in the way that they could and the trains running on time. I think under the circumstances, Patrick Tienen was the only choice that made any sense. He provided that through line of continuity from the previous kind of leadership team to the present one. And I think in any case, Patrick had Patrick had earned it. You know, I think he's a very talented executive, I think he's very forthright, I think he has a good vision for Lloyds, and I think he has the respect of capital and distribution partners. So I think even if it hadn't been one of those situations where where they really needed a point of continuity, I think he was the right person for the job.
Sam Casey: 3:51And they, more broadly, they've gone for a double act with the CEO and the chairman with Charles Roxbury. Although he had some history with Lloyd's very early in his career as a consultant, he's come from very much the outside, from the world of government and the treasury. It looks like they're looking after quite different things in their roles.
Adam McNestrie: 4:11I think that's right. You know, they've tried to choose complementary leaders. And I think everybody seems to be of the view that Roxborough has that understanding as a Mandarin of the corridors of power and has the connections that the Lloyd's needs into Whitehall, and that he will do well on the world stage and in all the kind of intergovernmental work. And I think he has a leg up on other candidates who would have had that kind of background just because he was involved in RR back in the 90s when he was at McKinsey. So he he's touched the market, he's been involved with the market, but yeah, very much an outsider.
Sam Casey: 4:46And if we take the John Neal subject in stages, the next chapter of the story which was played out was that he shot the market over the summer when it emerged that instead of going to Aon, he had changed course and was going to land at AIG. Is it fair to say that it looked like he was being at least in the running for the eventual leadership of that firm with the position he was going into as president?
Adam McNestrie: 5:11I tend to think that he was kind of air-presumptive to Zofino. AIG had had sort of looked a number of times to try and put somebody in place within the leadership ranks who would have the pedigree that they would be able to ultimately succeed Peter Zofino as group CEO. And I think Neil was kind of in that position. There's always, when you're put into a group present role, the sense that you're the front runner to succeed as CEO within a US corporation. But still, he would have needed to prove himself when he landed at AIG. And I think you know, there was always the sense that there would be enough time between Neil arriving and the succession that that John would have that opportunity to prove himself. As it transpired, it was not to be.
Sam Casey: 5:54Yes. So I mean, everyone listening to this, I'm sure, would have seen the more recent news. So his appointment at AIG was cancelled by mutual consent in late November. And then it subsequently emerged that there'd been investigations underway at Lloyd's around some of his conduct whilst he was in office. There were allegations. There's still just allegations at this stage about a potential inappropriate relationship in the workplace. And we don't want to go into the weeds of that because all those investigations are still ongoing. But I presume this inevitably creates a bit of a headache for the incumbent leadership at a time when there's plenty for them to try and have a handle on in the market.
Adam McNestie: 6:35I think it's really unhelpful. Everyone that kind of comes into that job has challenges they have to face. If you think back to John Neal coming into that role, the market was at this sort of terrible nadir in terms of sentiment. The financial performance has been terrible. And, you know, that was a really hard inheritance that he had. I think from a financial perspective, Lloyd's is in a much better position right now. The results are good. The market is healthy. There's a lot of capital that's interested in coming in. But yeah, Patrick has his challenges. You know, first of all, the the rate environment is going south at quite an alarming rate. But yeah, this is um, you know, and then you have the and then you have the sort of the tech challenges the market's facing too. You know, I think about the delay of Blueprint 2 delivery back to, I think it was 2028, as being kind of the equivalent of a new CEO taking a big reserve charge. You know, it's sort of get the bad news out there.
Sam Casey: 7:26Someone said to me it should um have its own risk code.
Adam McNestie: 7:29Right. Yeah, well, I mean, it probably should at this point. But yeah, they've given themselves some sort of breathing room around the timetable, and hopefully now they can overdeliver. But I think this near thing is really quite unhelpful because it means that at a point where Tinan wants to be pushing forward his agenda, setting out his stall, really establishing himself in the CEO role, that the shutters have to kind of go down at Lloyd's. And look, I don't want to get into the details you said because there are a live investigations, but I do struggle to follow the reasoning behind the first Lloyd statement that they made after the Wall Street Journal article, where they had a they had a completed legal review in hand, and it might just have been the better thing at that point to have laid out the kind of the executive summary of findings and said, look, here's here's full transparency as to where we are. We think there's some new information, and therefore we're going to appoint a different law firm to take a deeper look. That may have been a better way to deal with what was a very, very challenging situation for the Lloyd's leadership team. I'm I'm not without sympathy. You know, this is a very thorny, difficult situation to deal with.
Sam Casey: 8:33And if we switch tech now, another subject which has certainly kept us busy and also generated huge interest from readers is the ongoing story of eponymous David Howden, led brokerage Howden. I was looking back at our archives, and it was May 2023 when you first wrote an article titled Inside Howden Targeting World Domination. This project's rimped up a bit in dramatic style over the last 12 months. They took their um journey on the Mayflower, and Pilgrim Father Howden is looking to conquer the United States. Can you tell us about how the Howden saga has played out with their US launch this year?
Adam McNestrie: 9:18I'll do my best. A lot has happened. And I think you're right in saying it's it's it's the culmination of something that they've been thinking about for a long time. We broke that story in in May 2023 that they were thinking about going into US retail. I think that probably there'd been a Clinton Howden's eye earlier even than that. But at that point it was really something that they were set on, and it was a matter of when, not if. The story of the year, I suppose, has been of a false start and then a sort of big bang of hiring after that. This first strategy was acquisition, risk strategies was the target. Yeah, so they were gonna they're gonna do a big deal, go in with both feet, and then I think do an aggressive hiring and team lift strategy off the back of that, but onto an established US retail platform. And as you say, the the target that they lighted on was strategies. They got a long way down the road on that 10 billion EV deal.
Sam Casey: 10:10Why the acquisition routes as a first port of call? I guess it gives you a standing start as opposed to building organically from scratch.
Adam McNestrie: 10:18You buy a business that has established cash flows, that has infrastructure, that has leadership, it jump starts what you're trying to achieve in that marketplace, you know, as well as the fact that it just allows you to move faster. In Howden's case, it would have given them an offset to revenues that they were going to lose elsewhere in the group in the London market, wholesale platform from retailers in the US pulling their business because now they're competing with Howden. So I think there was probably an even more compelling reason for Howden why it would have been helpful to have had a large US retail platform like a Risk Strategies or a Galway or a Hilb as the starting point rather than going de novo.
Sam Casey: 10:57And you speak a lot to people in the States based on some of the conversations you've had after they've done what they've done. What sort of level would you assess the extent of the anger and frustration amongst some of those domestic US brokers who were Howden's clients and are now also their competitors?
Adam McNestrie: 11:17Well, I was at CIAB in October. I I'd written a lot about uh this already by that point, but I was actually really surprised by the degree of rancor that there was. Even retail brokers who weren't really in specialty where Howden would be, who don't place a lot in, you know, with them or with any broker into London Market Wholesale. There was just this kind of animosity to it. And I'm not sure whether it was Howden was targeting producers and clients of their own clients, the retail brokers that they traded with for a long time, or if it was just the braggadocio of the company in the way that they were doing it, or it was the degree of aggression around the team lift practices, you know, sort of coordinating these mass lifts and then sort of seeming to sort of set the rules to one side. There's a lot of anger. And I think in in some ways, that fuels the fact that there has been a faster withdrawal of business in London wholesale, possibly a bigger withdrawal of London wholesale business than than one would have perhaps expected.
Sam Casey: 12:19The backlash has been real. And Mr. Howder makes it easier for us journalists when we're looking to crowbar in metaphors into our copy. He's seldom not photographed a royal escort or next to uh one of his courses. Would you back this runner with their project?
Adam McNestrie: 12:35I I think I'm kind of on the record of saying I think the odds are somewhat long. It's really hard to build organically. It's really hard to come out of the UK and do this in the US marketplace. They're trying to do a number of different things at the same time as well. They've got to deliver the business, they've got to prepare for an IPO, they've probably got to cycle HG out of the shareholder base and bring in more capital for growth. They will do an acquisition, I'm sure, of some significant scale at some point that sequencing has been changed around, but I'm sure they will look to do that. And then they've got to defend in London. They're sort of furiously trying to do, but that they're in a really constrained position around that. So I think there's so much that they're trying to get right all at the same time. Now, I don't want to say that there's no way they're going to get this done because I think that David and Dominic Collins have an incredible track record with what they've done with Howden, kind of beaten the odds before. You know, I've got a lot of respect for Jim Hayes, who joined as vice chairman in the US as well. But this is a heavy lift. This is a narrow path to getting it right. It's going to be a it's going to be a fascinating watch, but yeah, they're going to have to be on their mettle. You have to admire the ambition, I think. On one level you do, betting big to win big. And I think that is what they're doing. But um, they're gonna have to execute to the nth degree to make this work. So, you know, they're gonna have to be, they're gonna have to be the best that they've ever been to land this.
Sam Casey: 13:59If Halden was the stare down, probably a story of breaking in underwriting, it seems that it was probably the M ⁇ A cycle which really ramps up in the second half of the year. It was something which we were expecting for a variety of reasons, which we've discussed on on here in the past. Any of those transactions which we saw in London which surprised you in terms of the model that was pursued, or were most of them fitting within a mold which made sense and kind of mirrored previous points we've had in the cycle in the past.
Adam McNestrie: 14:33I think that the overall drift towards more carrier MA was unsurprising, and we predicted it in last summer. In terms of individual transactions, I think there was quite a lot that was surprising, actually. I think it caught most of us by surprise that a mortgage insurer in Radian came in and bought Inigo, although it's it's obviously quite widely known that it's a small cohort of US mortgage insurers, but that they've been looking for deals at their P and C deals out there. And I think in particular, it wasn't a model we had on our list, was it? No, it wasn't a model that we had on our list. As soon as they popped up and did the deal, you look at it and you go, oh, actually, you know, that makes a ton of sense. They're saturated, they're in a low growth marketplace, and what they're looking to do is diversify into an adjacency and one potentially where they've got sort of yeah, capital benefits as well as a sort of positive growth story to tell. So it kind of made a lot of sense once we saw it, and I think we'll probably see more of it as definitely active looking for a deal. I'd be surprised if they don't do something in the next 12 months. I do think it's interesting. You you kind of you end up with these pendulum swings back and forth and back and forth. You know, we've had a lot of deconglomeratization, which is a word that I can't say. You know, things like AG getting rid of its life insurance operation with the Corbridge deal because the perspective was investors prefer focused bets. Obviously, you can get the pendulum swing in the other direction and have these businesses looking to move across sort of different areas and adjacencies. And I suppose in this case, Arch is the poster chart of a P and C business that went the other way and put one foot into mortgage and made a lot of money doing it.
Sam Casey: 16:06And then some of the other deals fitted the expected mold, if I think about say somehow buying Aspen. We knew that the Japanese carriers were flooded with cash because of what they've had to do in selling off their crossholdings. But even though that's happened, we might expect to see some more of those deals like that from the Japanese big three.
Adam McNestrie: 16:26Yeah, I think that's reasonable, Sam. I mean, I called it the great Japanese MA contest, this one-time windfall of$50,$60 billion that's going to crystallize over the next two to three years. And they are very much in the mould of those um mortgage companies in that they're saturated in their home markets. And the obvious play, therefore, is go and internationalize those businesses. And Tokyo Marine has built a really strong and diverse international business. I think it's now contributing over 50% of the profits of the Tokyo Marine group. You know, Tokyo wants to push still further, but which also SOMPO and MSNAD are looking at. So I think they're going to have one-time available funds. They've got cash flow anyway, they've got a strategic imperative to do something. So yeah, I think we're going to see more activity over and above what we've seen already. You know, Tokyo has probably been held back by the fact that they had a CEO succession, but that's now in place. So I think I would be surprised if we don't see them look to do something over the next 12 months.
Sam Casey: 17:26And in in certain what was one of the most fiendishly busy weeks of my career, we had start doing a deal with IQ and then host on its heels, Convex, Stephen Catlin and Paul Brand have done it again, securing a pretty stonking valuation for that business after six or seven years in operation. The scale they've built is huge.
Adam McNestrie: 17:47Yeah, no, we didn't sleep much that week, if I remember. Yeah, there was this real flurry of deal making, and you also had the AIG Everest Renewal Rights deal not long before. It was coming thick and fast at that point. The convex deal is uh is an interesting one. You know, I think very much the Stephen Catelyn and Paul brand mission was have an independent business and find a way to finance it that will give it kind of longevity. And so, first of all, it was okay, we've gotten money from Onyx, but it's 10-year money. And now it's we're on the Onyx balance sheet, we've got the AIG strategic minority investment. It's sort of like nothing to see here, we're financed for the foreseeable long-term future. And I suppose that does kind of make sense if you think about what both of them went through with the XL Catelyn deal that was ultimately a very unhappy marriage. That they're obviously not keen to jump back into doing that. And then the other options, like a London IPO, you know, have significant drawbacks as well. You know, they magic this together. I don't think this was a deal that anybody would have picked, but I think it puts them in a really, in a really strong position. And I think it suffered some nice returns for Onyx as well, with a 1.9 times multiple, which I think, as you say, is stonking, particularly for a non-control deal.
Sam Casey: 19:01And 2025 was the year that Willis Re finally happened. It's been the talk and speculation of the reinsurance world, places like Monte Carlo for what seems years. I was sat in court last week, uh, the Royal Courts of Justice with Guy Carpenter in their case against Willisrie and various of the individuals they hired, some of whom now are starting to land at the firm. What they managed to achieve as they ramp up and start trying to do business is something that we'll be watching next year, I think.
Adam McNestrie: 19:33If you kind of step back from it and you think about Willis's positioning as it came out of the abortive Aeon transaction and offloaded Willis Reader the first time, you kind of look at it and you go, okay, why has Willis ceased to be perceived as the third member of the big three? And I think there's that there were the two main things that set it aside, besides scale from Aeon and from Marshall McClellan and from Gallagher. One of those is it's underweight in USP and C. It's not performed as well there. And the other one is that they lack reinsurance broking. If you wanted to try and return Willis to its place within that upper echelon of global brokers, they need to build scale and quality in the US and they need to build reinsurance broking. So I think that there is a strategic imperative to do this. I think it's really hard to do it successfully.
Sam Casey: 20:22Yes, it's a notoriously competitive area, lucrative if you can get it right.
Adam McNestrie: 20:26Yeah, that's it. Look, like reinsurance brokers make large global PC broking groups better. I think there's no doubt about it. It works very nicely as a complement to a retail broking business where you've got flow into the insurers and then you've got outwards on the reinsurance. And I think also just you tend to have this sort of brain trust that exists within the reinsurance brokers, and they become these little kind of like nodes of RD for the broader group, and you can export some of that back into retail. If you can do it and you can build it at scale, it's really additive.
Sam Casey: 21:01I think it's fair to say 2025 has been a pretty active year. There's been plenty of developments. Adam, thanks for sharing your thoughts on it. Not at all. Happy to be here. Thanks, Sam. And thank you everyone for tuning in. That's our final episode of the year. We'll be taking a brief break over Christmas and New Year, but we'll be back again early in January to bring you some more episodes. So thank you for tuning in.