US insurance broker Lockton leapt from having virtually no protection and indemnity capability to becoming a major player with its acquisition of Italian rival PL Ferrari in 2016.
Then, late last year, it bought a 50% stake in Turkish broker Omni Sigorta.
Lockton’s sudden emergence as a P&I brokerage has its roots in a decision four years ago to break into the marine market. It assessed the shipping industry as fitting with its own strategy of doing business, with largely privately owned companies requiring a high service capability.
In PL Ferrari, it found a company that was also heavily service-focused, Lockton head of marine and transportation Alistair Rivers says.
London-based Rivers, a former high flyer at Willis who headed global property and casualty there, was recruited by Lockton as part of its drive in the marine market.
“If you want to differentiate yourself in marine, then it should be through the quality of service, and that is something PL Ferrari has stood on since its founding,” Rivers tells TradeWinds.
While most of the P&I mega-brokers focus on transitional broking, he adds, PL Ferrari has based its business on providing additional consultancy and claims-handling advice to owners in southern Europe who could not speak English and could not deal with the P&I clubs directly.
Higher staffing levels
The PL Ferrari model, which is based on higher staffing levels, could not be replicated in the City of London because of cost, he says.
PL Ferrari’s London-based broker, Stephen Hawke, who was part of a management buyout of the Genoa-headquartered brokerage from former owner Aon, says the tie-up with Lockton has allowed his firm to expand globally.
PL Ferrari is strongly associated with southern European business, which accounts for just over a quarter of its revenue, but the idea is to even out the cover.
“From our perspective, we were an international P&I broker and we wanted to expand and we wanted a partner that could potentially have a footprint in areas which, for us, would require a big capital investment,” Hawke says. “We wanted to do something in China, which would have cost a lot of money. But working with Lockton, it came through fairly easily.”
Rivers is happy for PL Ferrari to continue with its trading name and, sometime in the future, it will combine with Omni Sigorta.
The brand [Pl Ferrari] is so strong, we are more than happy to utilise it across the globe. We don’t see them as an Italian broker. We see them as our P&I broker internationally
Alistair Rivers
One criticism has been that PL Ferrari and Omni Sigorta are both strong in the same southern European markets, but Rivers’ view is that they are similar service-minded companies that complement rather than duplicate each other’s strengths.
Hawke says PL Ferrari has been in close contact with Omni Sigorta, and the two companies are excited by the prospect of working together.
Global plans
Rivers would like to see Lockton’s global expansion in P&I conducted through the PL Ferrari name.
“The brand is so strong, we are more than happy to utilise it across the globe,” he says. “We don’t see them as an Italian broker. We see them as our P&I broker internationally.
“We believe that the globalisation and regionalisation of business are key drivers in the marine world, and we need to have a capability that reflects that.”
Many observers are asking where the P&I acquisition trail will take Lockton next, but Rivers says it is wrong to assume that this is the company’s favoured form of expansion.
He would rather prioritise recruitment than takeovers, and Lockton has been as active in hiring some of the leading figures in marine insurance as it has been in acquisition.
“I think for us, it’s less about identifying acquisition targets,” Rivers adds.
“There are numerous brokers up for sale, and there have been for the last three to five years, and that is just because of the depression in the marketplace and pressure on pricing and the challenge of technology.
“Our focus is on building global marine services in those territories we want to be in. If we can find the talent, then we will hire the talent.
“If there isn’t the talent but there is an acquisition that complements our strategy, then that is what we will do, but we are not on some sort of acquisition trail.”
