RKH Specialty and retail broker Howden are going through the process of merging from two separate brokerages within the giant Hyperion Insurance Group into a single unit.
The consolidation is due to be completed by October, when RKH and Howden will combine management teams and operate as a single brand, Howden Speciality.
Both have substantial marine brokerages, and the marine teams have been working closely for the past three years. So, why change?
RKH head of marine Dan Whiteside explained the rationale behind the merger.
“The Howden marine expertise in London is embedded in the RKH team," he said. "Overall, the group is diverse and has scale, but people find it hard to identify that.
"We are punching below our weight because people don’t recognise the scale of the group, so the merger will be more than an alignment of interests, it will also be a more recognisable brand.”
Ahead of the merger, RKH has beefed up its marine team with some experienced heads.
Julian Franzman joined RKH in Singapore from JLT RE Asia as head of marine, cargo, hull and liabilities for the Asia Pacific region, while former SSL Endeavour marine broker Gillian Martin has also come in as a marine director.
Tapping capacity
Whiteside said the new additions are part of a strategy to tap insurance capacity worldwide.
“We felt that we need global solutions and having boots on the ground in Asia is important, as is having people that have traded in that environment for the last two decades,” he said.
"They [Franzman and Martin] are both quality people that have added to the overall strength of the marine team as we are building out the marine business."
RKH Specialty
Annual premium: $6bn
Employees: 3,000
Locations: 121 offices in 38 countries
Howden
Annual premium: $22bn
Employees: 10,000
Locations: 90 countries
Last time TradeWinds spoke with Martin at SSL Endeavour, she was keen to talk up the benefits of the small boutique niche broker in building familiarity with shipowner clients.
She claims not to have changed her tune now that she is a part of insurance conglomerate Hyperion where, she believes, the personal touch has not been lost.
“Here, what I have noticed, people are always on the phone and there is a high level of contact," Martin said. "I feel it is the best of both worlds, it is very ‘boutiquey’ in its service style, and we are relieved of all the kind of business-running issues that you can get in [the way at] smaller brokerages. So we can just get on with the stuff we are good at.”
The merger will extend RKH’s global reach, which the broker believes is important at a time when shipowners are seeking solutions to help counter rising hull, war risk and protection and indemnity premiums.
“For us, it is about delivering options which could be a Far East or South East Asia solution, or it could be a Lloyd’s syndicate that has been around for the last 50 years," Whiteside said. "Our job is to use creativity to find the markets that have appetite for business right now.”
Brain drain
Closer to home, Martin is concerned about the difficulties at the Lloyd’s of London market, where marine syndicates have been put under pressure to improve profitability. As marine syndicates have scaled down, Martin believes the loss of underwriting talent poses a threat to the London market's future health.
“With some of the syndicates that have withdrawn from the marine class, we have lost experienced people and potentially cool heads in what can be a volatile market," she said. "That is a loss for the London market, not just Lloyd’s.
"People that have the experience of trading through these difficult times are needed now more than ever. That is desperately important.”
As part of the profitability drive at Lloyd's, brokers are coming under increasing pressure from underwriters to reduce acquisition costs, which are theircommissions and expenses that they take from premium.
Driving efficiencies
Whiteside said advances in digital technology are key to helping brokers achieve lower costs. RKH can call on the digital insurance procurement system, Hyperion X, which is being developed by the Hyperion group. He believes there is now potential to develop it across all marine lines.
“Hyperion X is a significant investment and the goal is to provide a digital solution," he said. "We continue to try to drive that from a marine perspective to become a more efficient product to the client. The marine market needs to continue to do that.
“That is the process we are working out now. We have started proof of concept and we are quite far advanced on cargo. It gives us an opportunity to apply it to other areas of marine. It is a challenge to work out when and how but there is inevitability to it."
