Ep308 Stephanie Ogden, Munich Re Syndicate: Balancing Realism and Ambition

Speaker A: I'm Mark Geogan and you're listening to the Voice of Insurance podcast, produced in association with Advantage Go now, part of Sapiens enabling enterprise scale underwriting through a single pane of glass. I'm really happy about today's podcast and that's because today's guest is a shining example of a new, very well prepared generation of leaders that is coming through the ranks in the international insurance sector. With senior roles in the company market and inside Lloyds itself. Stephanie Ogden was well rounded before she took on her current role as the CEO of the Munich Re Syndicate at Lloyds. Steph is a breath of fresh air. Actually, I'd say more like a blast listening back to this conversation. I've rarely spoken to someone who carries themselves as naturally as she does. I spoke to the same person before, during and after our, uh, recording. What you hear is what you get. And what you get is a very clear sense of how one of the Lloyds market's most consistently successful businesses sees the market today, where it sees its heading and how it intends to engage. This is a very well rounded conversation, as one might expect. It's technical and financial, but it's also technological, commercial, professional, passionate, personal, and laced with humor. Steph is hardly engaging and as well across the core challenges facing the London and global specialty markets, from the opportunities arising from the internationalization of the market to the impact of technological transformation and AI. Talking to Steph made me feel a little old, but in a good way. Growing old isn't easy, but when people really don't enjoy getting old, it's because they think that things are getting worse than they used to be, not better. 45 minutes with Steph and the only conclusion one could draw is that many things are definitely getting better and the market's best days are ahead of and, uh, not behind it. Enjoy the podcast.

Speaker B: Steph, welcome to the Voice of Insurance.

Speaker C: Great to be here. Ah, thanks for inviting me.

Speaker B: This is the question I'm, um, open with everybody now. How did you get into insurance?

Speaker C: Yeah, how did I get into insurance? So, believe it or not, I'm actually now approaching my 20th year in insurance. Isn't that amazing? I'm far too young, but yeah, honestly, I left university, I was looking down the list of graduate employers. I appreciate that sounds very boring. And I got to a sensible. Sensible.

Speaker B: Well, A. In insurance, you've got quite a big choice, haven't you?

Speaker C: No. So I went to the first A, I think, which was Allianz at the time.

Speaker B: Well, I suppose, yeah, you could have gone to eig, couldn't you? Because that would have been alphabetically higher up the list.

Speaker C: Well, it wouldn't have.

Speaker B: It could have been American International still at this time, who knows? Or something, you know, it's true.

Speaker C: But they were my only insurance company. I applied for Lloyds TSP at the time.

Speaker B: But Allianz is a good place to start.

Speaker C: Amazing place. Amazing place to start.

Speaker B: I mean, you're going to be put through, you'll be doing your acii, uh, you'll be learning all sorts of things, you'll be rotating through different departments and so you'll get a really good grounding,

Speaker C: literally all the above. And that's why I chose it, because I didn't really know what I wanted to do. And they gave me a great grounding going all around the company. I thought, I would love to be a project manager, because that sounds great, doesn't it? And then I thought, oh, I'll be a business developer. Thought that sounded great. But actually I loved underwriting.

Speaker B: I just can't imagine how anyone would want to be a project manager. But then that's just me, you know, because I just think of those sort of big spreadsheets where it's this organizational, this has to happen before that can happen. And if that's delayed, that causes a knock on delay for the other thing. Now they have to push this back and all this. For me, I just think, no, I'm really glad other people do that.

Speaker C: And that honestly is where I am now. But at the time I was like, I didn't know. So I ended up in underwriting and genuinely, I loved it. I started doing pnc, moved into more liability, came off the graduate scheme early to underwrite because I loved it. And that's really where I found myself for a good number of years.

Speaker B: So you were in liability underwriter?

Speaker C: Yeah.

Speaker B: Excellent. Well, I was a liability broker, so, yeah, our paths didn't cross because I think by the time you'd started, I'd already left to become a journalist, so we wouldn't have done any broking. Yeah, I'm not sure we placed much business with Allianz because we'd have had Allianz locally, this would have been Spanish business. So Allianz is already so big locally, there's no way we'd have seen it through on the market unless it was really massive or something. I didn't see much doubling up.

Speaker C: No, no. But, you know, it was an unbelievable time. So I spent 10 years there, worked in lots of different roles around the business, including geographically as well Sadly, I don't think I can really say that Scotland is international, but that was probably as close as I got.

Speaker B: Almost. There was a referendum. It was almost.

Speaker C: It was.

Speaker B: But it is international because it is a nation, part of the United Kingdom, so.

Speaker C: Yeah.

Speaker B: And different laws.

Speaker C: Yeah, absolutely. But I think when I tell people that it's my international placement, they laugh at me.

Speaker B: And you were running Scotland, weren't you?

Speaker C: Yes, I was running this Scotland office. I think people were pretty surprised when I put my hand up. It wasn't, um, the highest performing branch for the business. In fact, it was probably the worst performing branch by financials perspective. But also, employee engagement was pretty low.

Speaker B: I suppose if you know you're not doing well and you're not getting big bonuses and you feel that it's not going anywhere, I suppose you're bound to be a bit down in the dumps and probably looking for a job somewhere else.

Speaker C: Yeah. So then I walked in as the youngest person in the office. English didn't help. The gender piece obviously came into it, so there were a few dimensions where I probably wasn't welcomed with open arms.

Speaker B: Well, there's not necessarily a great history of strong ladies coming from the south and telling them what to do.

Speaker A: No.

Speaker B: Sort of. You come in like Mrs. Thatcher or something. So there's not been a great precedent.

Speaker C: No, no. But do you know what? It was a brutal six to nine months. And I can say that even with the team that are still there today, it was really hard. The brokers gave me a tough time. I really had to work for, I suppose, their respect and credibility. But I loved it. By the end. I loved it.

Speaker B: You've got the tools of a. I mean, it's difficult to measure, isn't it? One of the two largest insurance groups in the world. So you've got so many different buttons to press, uh, and you've got all these resources and you've got things you can do.

Speaker C: Yeah.

Speaker B: So once you've learned how to do them, you're still Allianz. At the end of the day, no one's going to say I don't want to place business with Allianz.

Speaker C: No, absolutely. And I think people were very welcoming of the brand in Scotland at the time, and I hope still are. But also bringing talent into the business as well. I think it was perhaps an underinvested branch and bringing some new people in to just revitalize it. It definitely wasn't all about me. It was actually about the team and the way it grew. I enjoyed it by the End M. But at the time, it sounds like

Speaker B: it was a good calling card. That was something on your CV and that obviously attracted attention of others.

Speaker A: Yeah.

Speaker C: And I think it was a willingness to step outside of my comfort zone. Uh, that sounds a bit cliche, doesn't it? But I was sat in London.

Speaker B: Not many other people would really have fancied that job, to be honest.

Speaker C: No, no. I think that's what we found.

Speaker B: That's how you got it.

Speaker C: You say, no, absolutely. I got it because there was nobody

Speaker A: else on the list.

Speaker C: But I just was very comfortable sat in London. I was liability underwriting, I was comfortable here. My friends were around, my family around. I thought, I'm just going to. Why not throw it up in the air?

Speaker B: And then next.

Speaker C: Next was Lloyd's called. So Lloyd's called. And obviously I'm not Scottish. And John Hancock was setting up a new team, so his oversight management team. And they asked me to come down and would I be interested in joining this new team. And it was just the time when decile 10 was kicking off.

Speaker A: Yeah.

Speaker B: So you're sort of out of the frying pan into the fire then.

Speaker C: Wow, what a roll.

Speaker D: Right?

Speaker C: Naming no names. My first day was walking into a syndicate telling a CEO who obviously knows exactly how their business runs, actually, Lloyds don't trust it. And that's it.

Speaker B: Those in the know will be able to narrow that down and look up the old headlines.

Speaker C: Yeah. But it was very, very different role to what I was used to. I was given the freedom at, uh, Allianz, essentially. I was running my own P and L to come down to Lloyds. It was a fantastic experience. Looking back, no better learning ground and also understanding what's making all these syndicates tick in the market and realizing every strategy is very, very different, every leader is very, very different. And it was a real unique experience. Although maybe challenging at the time.

Speaker B: There's a huge variance within the market, isn't it? It's a very broad church.

Speaker C: Yeah.

Speaker B: Massive.

Speaker C: Massive. And coming from a place where I'd only known Allianz, I'd done 10 years at Allianz by that point. Lloyd's was an unknown to me. And it has an allure. Right. Lloyd's has a real allure from a perspective of you want to understand it better. And coming from the company market, it was really exciting and, um, I'm about

Speaker B: to say the word arrogance, but that confidence or that self awareness, that Lloyds is special and there is something special about it.

Speaker C: Yeah, absolutely.

Speaker B: And we all agree.

Speaker A: Yeah, yeah.

Speaker C: Absolutely.

Speaker B: Sometimes it comes across as arrogance, so it's not what I mean. I'm just trying to articulate it. It's difficult, but it must have been difficult coming from Allianz into that.

Speaker C: Very, very.

Speaker B: Especially into this. Really difficult and a really tough time when the market wasn't, uh. No one was really performing, frankly. Yeah, well, no, some were.

Speaker C: That's a nice full circle moment. Right. Because that's how I got to know Munich Re. That's how I got to know the syndicate. So I was the oversight manager for Munich Re, got to know the characters here. And so we'll come on to this, I'm sure. But it feels like a bit of a full circle moment for me coming from being their oversight manager.

Speaker B: Well, I suppose it's the old, um, you know, you work at an auditor and then you get a job at the regulator and then you go back to the auditor. Yeah, well, maybe not. But no better way of finding out about a business when you're in the kind of privileged position you are where you get to see everything.

Speaker C: Yeah, absolutely. And the number of high profile conversations going on at the time when I was at Lloyd's, unbelievable experience.

Speaker B: But you did have something else. You had another job.

Speaker C: Yeah, but I left. I must admit, the Lloyds role, whilst it was an incredible learning experience especially.

Speaker B: It's not a career role, is it? Because there's not necessarily anywhere it can go.

Speaker C: No.

Speaker B: Unless you take over from John next or whatever, you know.

Speaker C: But really, it wasn't my skill set, if I'm really honest. That regulatory type of role wasn't really where I felt I was operating at my best. So I got a call then from hdi. It was an opportunity to go back out into the market, which was a big tick for me. Be back talking to clients, brokers again, and in an area which actually hadn't seen that much focus or attention from hdi. And that's, uh, where up until recently I was for seven years.

Speaker A: Yeah, it's a pretty big business.

Speaker C: Big business. Great business.

Speaker B: And then you're here. We've come fully up to date.

Speaker C: Yes.

Speaker B: So before I ask German headquarters companies, do you speak German?

Speaker C: I don't speak a single word, uh, of German. Isn't that unbelievable?

Speaker B: I thought maybe that was a thing, you know, that would be. Oh, because obviously you speak fluent German. That's one of the reasons why you've had infinity with it. It's just a coincidence that really.

Speaker C: It's a massive coincidence. And people obviously have asked me that a lot. It is a Coincidence. But what I would probably say is I do therefore know a lot about German culture and organizations.

Speaker B: They are different.

Speaker C: Yeah, absolutely. And I think I of course have a huge amount of respect for, for the organizations that I've worked for. And I think coming from a, uh, culture, it has helped for sure.

Speaker B: So tell us about your role here.

Speaker C: Yeah, so here I am. So I took over as CEO of the Munich Re syndicate. Took over two months ago. So still feel pretty new. Particularly when most people at Munich Re are absolutely well into their double digits in terms of how long they've been here.

Speaker B: There's a lot of stability.

Speaker C: Huge, huge amount of stability. So the syndicate, Wright primary insurance of the specialty lines. It's a real privilege to be leading the syndicate. And I think it's got the beauty of being part of the Munich Re group. Right. And I think people are pretty open with the nervousness when we changed from Watkins to Munich Re. But the advantages have been huge from joining such an amazing organization.

Speaker B: Um, it's never going to be unacceptable security 1. It's Lloyds and it's Munich Re. Yeah, you, you can't really get any better than that. Um, I mean there probably are better sort of actual collateralized cash sitting in a vault somewhere. Yes. But otherwise, no, no.

Speaker C: And honestly that is the reason why I joined to be at such a prestigious organization. You have the beauty of being part of the Lloyds market, which is so special. Going through this period of challenging times, I would say from the market, but having the backing and the stability of the Munich regroup. Huge privilege. It's great to be here.

Speaker B: So for anybody who doesn't know the Munich Re syndicate, and obviously there have been changes over time. Run us through where you are and also where you sit within the M. Munich Re organization.

Speaker C: Yeah, absolutely. Of course. So you're right. So when I told people I was joining the Munich Re syndicate, there were two questions that came out. Is like where is that in the Munich Re group? And what do you write? Is that the old marine energy business, but actually now we are a much more diversified syndicate. So we have 20 plus lines of business that we're writing now. And we've made that transition away from being focused on the marine energy piece. In terms of where we sit in the Munich Re group, we are under the new global specialty insurance banner which is run by Mike Kerner. So we are the specialty lines underwriter, but we are the Lloyds platform for the group. So I lead that platform. In terms of size, we are 1.3 billion around. We've got capacity for 1.5. We have around 400 people working on the Syndicate, but we have a functional model. So people might be touching more than just the Syndicate, but generally we've got about 400 people working on the Syndicate.

Speaker B: And obviously you're new in the job should we expect any change in style?

Speaker C: So I think the one thing which will stay is our absolute focus on our bottom line and our underwriting discipline. You can see that over the years. And it's not just a, uh, reflection of the Syndicate, it's a reflection of the Munich regroup. We will always prioritize delivering profitable growth. But I think the change that you might see in my leadership is Thomas Altman did a phenomenal job as CEO, uh, from a perspective, his background was as a lawyer, lent heavily into the governance, was fantastic. From a perspective of building and what he delivered over the past number of years, I have a huge amount of respect for. I think where I will be a slightly different leader coming in is, is what drives me is talking to our brokers, talking to our partners, and really understanding what's making them tick. As I've come into Munich Re and see all the incredible access we have to the experts, uh, around the business that we have, I think we could talk louder, I think we can talk more boldly about what Munich Re has to offer this marketplace. And I hope to be supporting the teams in doing that and leveraging some of the unbelievable opportunities out there.

Speaker B: I look at your website and you look at all those lines and you think these are all classic Lloyds lines.

Speaker C: Mhm.

Speaker B: And I suppose it's the logic, isn't it, that if you're, you can access business from all over the world, anytime, in many, many different ways. But I suppose the advantage of Lloyds is accessing that business that particularly primarily accesses Lloyds and lives in Lloyds, things like aviation, hull war, and they don't live outside very much, let's say a lot of political violence and political risk. Things that are very much associated, you know, with that, uh, underwriting room.

Speaker C: Yeah, absolutely. And I think I've spent my first week now in Munich itself. And the respect that the Syndicate has in the group, for exactly that reason, we're able to dial up in certain areas, dial down, where we don't see the opportunities and being able to nimbly react as the market moves. Often the Syndicate has a voice around that table to influence what the group's doing, seeing, feeling, because we are and occasionally are the lines that are writing that business.

Speaker B: You have the sort of bleeding edge of cutting. Hopefully not bleeding, but cutting edge of a lot of those risks.

Speaker C: Exactly, exactly.

Speaker B: And of course those are things that are manifesting all over the globe. I was once lucky enough to go do an interview of the CEO, uh, of Reinsurance at the time, talking to Warwick and I'm having lunch in the canteen. It was a really good lunch and nobody charged me for it as well. But it was almost like I felt. It was like the United nations of insurance. I just felt like there were people from all over the world, the world coming in to visit or obviously, or they worked for Munich. It was just really astounding, actually.

Speaker C: Honestly, that's genuinely how I felt when I spent the week there. I was like, this place is incredible for, like, experts, people that you can go and speak to who have doctorates in these topics and you can sit and debate.

Speaker B: A lot of people have the word doctor in front of them in their title, don't they?

Speaker C: Do.

Speaker B: That's one of the things that's the biggest difference between German capitalism and Anglo Saxon capitalism, isn't it? I don't assume anyone have a doctorate on the board of a British company,

Speaker C: but yeah, but you know what? Unbelievable place. To be able to leverage some of that and to tap into some of that information is great. And somebody made a really funny comment to me when I joined. They were like, when you go to Munich, what you will see is you'll see lots of people sitting at tables, having meetings, coffees, debating, challenging. And that's what it's like. It sometimes can feel more like an academic institute. And for someone like myself to come in and have this opportunity, it's brilliant.

Speaker B: And the job is obviously to move it from the abstract into the absolute day to day. You know, the gut and thrust of actually dealing with brokers and making something that someone wants to buy.

Speaker C: And I genuinely think that's why they hiring people like myself to turn that into reality and get that nice balance between the academic aspects, technical aspects, whilst drawing on the commercialism and being a business.

Speaker B: And, um, you've got a really broad and diversified portfolio within the syndicate. Are there any lines that you're eyeing and thinking, oh, we could add this. Would we expect you to add a few lines here or there?

Speaker C: Yeah. I think what you will see from us as a syndicate is we recently have made a number of investments in the international casualty space. For example, our book is heavily dominated by US risks, so what it's not about doing is dying down the us, but it's exploring new territories so we've got a European expansion project on the go at the moment. Funny enough, just this morning I came out of a board meeting to discuss the Australian opportunity. So rather than necessarily product lines, I think what you'll see is territories and where we're playing, because I think there's a great opportunity for us there as

Speaker B: Australia being a natural sort of having that affinity with Lloyds.

Speaker C: Yeah, absolutely. So there's that aspect. But coming back to your point about product lines, obviously, just before I joined, we launched the Pandemic consortium. And that is just a fantastic example, I suppose, or a reflection of what Munich Re does. So. Well, we've launched the consortium. We have now actually had our first order come through. With everything going on right now in the media, maybe it's going to become ever more relevant.

Speaker B: I suppose when you look at the macro picture, the pandemics seem to be likely to become more common than they, particularly as we encroach further into what used to be wild and, you know, people. Cities are, uh, bordering on jungles.

Speaker C: Yeah.

Speaker B: And, you know, diseases that we didn't used to get exposed to.

Speaker C: Yeah.

Speaker B: On a grand scale. It's happening now.

Speaker C: Yeah. And we've got teams of people working on this stuff, helping us to build the products which our, uh, clients and brokers need and want.

Speaker B: It's good because.

Speaker A: Yes.

Speaker B: In my insurance career, you can spend years building this thing and it turns out no one wanted it. And you think we should have probably checked to see if it was before we built.

Speaker C: Yeah.

Speaker B: Often the amount of sort of schemes and things which have just dust sort of gathering on them and no income, and it just gets really awkward and you think, oh, dear, we haven't a pound of risk yet.

Speaker C: Well, we have. I can assure you we have.

Speaker B: That's really good talk about the market. The pace of the softening has taken a lot of people by surprise. In fact, it didn't seem to have taken the syndicate by surprise, because you had already d. Emptied, actually, a little bit when most other people were still preempting last year. It's no surprise that the market would soften, but it's a surprise it softened faster than we thought it was going to. So that's a negative surprise. Does a negative surprise change your strategy and say, well, now, that's worse than I thought it was going to be? That's going to change what we do and how we go about our business.

Speaker C: Look, absolutely. Naturally, we just gone through our Strategy Cycle, Ambition 2025, and the market was working in ours and everyone else's favor. Now we're in our next cycle. So ambition 20, 30, and we are looking at it, we're looking at it very closely, looking at are our plans realistic whilst having enough ambition in them. And I think that's the interesting dynamic that we've got at the moment. Nobody will be surprised to hear me say that Munich really are, uh, being cautious and conservative around what the next couple of years will look like. Nobody will be surprised by that. Equally, I think it's showing enough ambition which people can get behind. And really we're still open. Right. There are still plenty of opportunities out there, particularly for players like ourselves when we have the people that we do. So I think getting that balance right with the market dynamics the way that they are, it's going to be really interesting. And I think you make the point around, has the market softened quicker than everybody was expecting? Yeah, undoubtedly. Right. If you compare it to the previous cycles, it has softened quickly. That said, there are all the reasons for it. It's a very different marketplace now to what it was seven years ago through the last softening. And if you look at the digitalization of the market, the AI, the facilitation, I think that's why the comparison is perhaps the way it is and is gone.

Speaker B: I suppose we've got better at finding out what the real price of something is and so there's no reason to hang around. It's a shame. Obviously, we want to hang around with excess profits, but excess profits will disappear quicker because everybody knows what the right price is and the price at, uh. Which will still produce the returns that you're after, of course, because again, once it goes below that, you'll start stepping away because we'll all know where we are. Whereas the problem with the insurance industry in its long history is that we've never quite known where we were.

Speaker C: Yeah. And I think there's excess capacity now. Right. The industry had a great run over the last number of years. Unsurprisingly, um, there's more capacity than ever. I think people want to be in London. I think London remains one of the most exciting marketplaces, so it's understandable. But equally, there's plenty of capacity.

Speaker B: Often, yes, when you have this softer market, you have a greater imperative towards innovation. Whereas when there's a really hard market on, you can say, sorry, just go away. I'm far too busy doing all this bread and butter stuff, uh, that need to concentrate on that, make lots of money out of that. And now I've done that and yes, I Am slightly more open to new ideas as a broker. It's only from the other side. It's easier to get things done when the market's a bit softer because everyone's more receptive and they're looking for new, new income. But do you think there are plenty of opportunities? The sort of opportunities like this pandemic thing, for example? There are so many things. I've just done a podcast with someone looking again at the transactional liability or M and A market, and I had no idea that that market is already up to 10 to 12 billion. And that's sort of 3/4 the size of cyber, which is for the amount of column inches that cyber gets. M and A gets only one tenth of that, but it's already three quarters of the size. So there are opportunities everywhere.

Speaker C: And that's exactly why we're looking at new territories, because whilst one territory might be going in one direction, there are opportunities out there. It's a huge marketplace and where you choose to play is within your gift. And I think being somewhere like Munich Re was a choice that I made because I believe that the opportunities for

Speaker B: us are there because the world's literally your oyster. I think with Munich Re, in terms of, you know, your understanding or, you know, your position in any territory in the world that buys insurance is going to have some connection to Muniri in one way or another, or Muniry will have and understanding or have a view of it.

Speaker C: And we can dial up, right? We can dial up where we see the opportunity. We can step back away from business over there. The diversity means that we get flexibility.

Speaker B: And, um, yes, we probably are guilty in London of. Because it's half of everything we do. Focusing too much on the U.S. yeah. To the detriment of, well, that's something that people buy in the US and other markets. There's a lot of other markets that don't have that product yet. They don't have that expertise, don't have access to that expertise. If we can spread that around, that'll be really good for everybody again, because it's certain that they will need that product.

Speaker C: Yeah, absolutely. And I sat on a panel like a couple of months ago and everyone was quite down in the dumps. It was all quite somber. And I think the Middle east hadn't quite kicked off at this point, but, you know, there wasn't much to jump around and be happy about. But actually, the reality is we're in the business of risk. This is our job. Like, this is the sort of stuff that should make Us tick. And this is the type of environment that should be making us jump out of bed and get excited about what the challenges are because it's our job. So I appreciate that sounds a little bit Janet and John, but honestly I do see opportunity and I think the challenges that we've got playing through at the moment is the reason we're all here.

Speaker B: And are we still getting the submission flows that we would expect? Obviously a reason to be depressed if you are sitting in London sometimes is particularly when the market really softens, is a lot of those local markets are building bigger limits and they don't necessarily need London anymore. And then the submission flows fall and so then you've got a softening market, but then you've got even less demand which softens the market even more. Are we there, uh, with that?

Speaker C: Yeah. So I would say our submission flows are holding up.

Speaker B: Yeah.

Speaker C: I think part of the reason for that though is the digitalization piece and the AI and it's making it easier to share risks and send out risks and get the submission flows up. Doesn't necessarily mean your hit rate and your strike rate is holding firm. And uh, naturally, as we're going through this differing market, that will be the bit which becomes challenged.

Speaker B: Your feedback's quicker on this. Yes. Well, let's talk about that because it's been fascinating. The last 10 years to go from would have been the first one would have been the AM Client Treaty. But then, um, to have fast followers, things like the Key Syndicate.

Speaker C: Yeah.

Speaker B: There was an announcement from Aon earlier in the week, which I need to fully digest. But we get into a position where a big broker, uh, will have a lead line. They'll have the sort of bankable aggregate capacity which might be 20% of that order already pre. Because it's a London order already pre placed. And then of course you've got electronic followers like Key, for example, that are just also sitting on that screen saying oh, because that leader is that lead. And we agree with that price. Here's another 10% line. And then we're not talking about a huge amount of uh, shoe leather has to be uh, expended to place the rest of that. And then with lots of other technology providers and brokers filling that in. So where's your strategy around that? I'm sure you're Munich Reese. You do lead a lot of what you do. I suppose not everybody leads everything. No, that's not possible.

Speaker C: So we're really seeing it as a bit of a bifurcation of the marketplace. So we have Strategies in place for every one of our products where we sit on that lead to follow spectrum. As you've pointed out, there are different places where you might sit within that spectrum. And for some we'll be lead. For some we might think we're lead, but we're not. We might be a follow and where do we want to get to over the next five years? And the ambition 2030 that I spoke about so changing our strategy and being absolutely clear about what we are and who we are and I think that for us then plays into the portfolio solutions piece. At the moment it makes up about 15 to 20% of our book.

Speaker B: Because I'm really glad I'm talking to you face to face now because I think that wouldn't be that clear from your website or even your annual report.

Speaker C: No. And experiences we don't historically and haven't played really on the broker facilities. Where we're really seeing our portfolio solutions is alongside the MGA model. We like that model where we find really highly expert underwriters. Work with them as a partnership and building out and supporting them with the Munich Re capacity, but actually working with them m about what their underwriting strategy looks like and building that long term partnership position. You're absolutely right. I wouldn't necessarily say we're strong at telling people that, but that's one of the things we need to do better. We do have an incredible team. And I think coming back to your original point about that lead follow, it's also the skill set that you're bringing in as the team is really important. The team that sit within the portfolio solutions team, they're not your traditional underwriters, they're not your traditional Lloyd's underwriters. So your whole operation model needs to be different. That sits around it. Your structure as a business, the way that you manage the result, the way that you're interacting with your partners is different. So you almost have to have three different strategies. You have to have your lead strategy, your follow strategy and then your digital strategy. Now that's making it very generalized, simplistic, but I think that's how we're seeing the market play out at the moment.

Speaker B: But you're not ruling out the digital side of things, the sort of that smart follow.

Speaker C: No.

Speaker B: But you haven't historically played in the broker facility that is uh, that permanent sort of aggregate. No deal.

Speaker C: Haven't historically, no.

Speaker B: You're not ruling it out, are uh, you.

Speaker C: We're definitely not ruling it out.

Speaker B: I mean obviously Munich Re great treaty underwriter, you know exactly how to underwrite portfolios and underwrite underwriters. It's not a problem in terms of, you know, expertise within the group, but

Speaker C: it's a question of timing. Right, I'm sure. I, uh, want to talk for our brokers, but I don't think they're stuck for capacity on their facilities at the moment.

Speaker B: No.

Speaker C: So it's. Where do we position ourselves?

Speaker A: Yes.

Speaker B: But if they're placing 30% of their business and then you say, well, could I do an additional 4%? They might say, great, now we're on 34. And, um, we've got Munich Reinvolt.

Speaker C: Yeah, absolutely right. They might. At the moment, our focus is on the MGO space because it's not the

Speaker B: sort of right where you have to fight. You have to fight for your share by, you know, sharpening your pen.

Speaker C: Yeah.

Speaker B: This is the sort of right where you could just be. You're just additional to everybody else and, you know, it's just another bit of automatic capacity. Great. Thank you very much. And make that broker's life easier and improve everyone's margins. Lower the cost base of the London market, you know, lower the cost of capital, of cost of doing business in the London market, which. That's one of the things I'm probably the most positive about in terms of. I think that prize is that we're a hundred billion pound market, or whatever it is, or £60 billion in Lloyds. I don't see any reason why it couldn't be 200 billion in a couple of years time if we get all this stuff right.

Speaker C: Yeah, I completely agree with you. And the cost challenge is one that we have to get on top of. And how we cost for the various different strategies that you're adopting will be really important, particularly as we go through the next number of years.

Speaker B: Yeah. And the results have been great. So I can't imagine the. There's no downwards pressure on commissions, only going to be upwards at the moment on those ceiling commissions. And what the broker commissions are going to be requested, one presumes, and you've got a smile on your face. So we've been through cycles before. We know it can be painful. I mean, you probably could do this. You're going to have to have a meeting with a broker and then they're going to ask for an extra point here or there, aren't they? And they may get it. So delegated authority is the priority out of all those forms of portfolio underwriting.

Speaker C: Yeah. So I think for us, with delegated. It is a growing area for us But I think Lloyds talk about it really frequently. It's where the capacity is coming from and sifting through the opportunities that we receive and, uh, making sure that we're choosing ones where we feel that we can truly add value. And it is a burgeoning market. There's loads of MGA's out there. But I think where we see the most success is where we can see that the MGAs are led by true experts in what they do. And it gives us an opportunity to pull away our capacity and build our book in a way that gives the expert the pen. And that's why we see it as a big opportunity. It means that we can invest in an organization where they are truly built and fit for this business, and then we can support.

Speaker B: So you're really looking at a skillful underwriter that you want to back rather than often it's distribution. It can be skillful distribution of a product or bring that product ticket size down a notch so that you can access a small SME business or that kind of thing that you wouldn't be able to get to otherwise.

Speaker C: I mean, naturally, we'll always go for the underwriting. Actually. That's who we are. That said, I think it's a totally fair comment. It doesn't always have to be about the underwriting. And there are plenty of examples where we're looking at other opportunities because of

Speaker B: the distribution and these niche products, the sort of products that you're not selling yourself.

Speaker C: Yeah.

Speaker B: I mean, you don't tend to be doubling up.

Speaker C: No, it will be where they offer, uh, something in addition to what we can do.

Speaker B: Let's talk about some really specific things. It's now made it into the mainstream press, not just the insurance press. It's become part of the dialogue about opportunities of 2026. Data center boom. Are you starting to see any of that come through? Because I suppose there's a huge amount of investment going into this. Projects are breaking ground. Are we starting to see that demand materialize? And obviously we've seen a lot of the big brokers reacting, getting ready, getting big stacks of limit ready to be applied. Obviously, given your position, I expect you've been in these conversations.

Speaker C: Yeah, absolutely. And I would absolutely anticipate you would ask the question on data centers. If I'm honest with you, I think everybody is saying something pretty similar. They're huge. The amount of capacity that's required to build these towers is something that we've never seen before. We are seeing brokers line themselves up and we are getting behind Them as you would expect. We would as Munich, really. So we will invest our time and expertise helping to structure what some of this looks like. Whether that's on the reinsurance side or from where I'm sat in the primary side.

Speaker B: Because there's a lot of specialty risk in there, isn't there? Yeah, obviously there's the vastness of that property risk in itself and obviously with the cat exposure that's probably bringing with it. But then there's alternative energy sources. It's energy storage. There's potential environmental liabilities because a lot of these things are kind of brownfield sites. A lot of old power stations are being converted into these centers, aren't they? So again, there's a lot to it.

Speaker C: There is. And it's the accumulation. Right. When you're the size of Munich re getting that right and making sure that you're playing in the right areas of the structure, it's huge. And it's really important to get right because actually we don't have huge amounts of experience. Well, there's a lot that we don't know at the moment about how these are going to look. Feel.

Speaker B: Yeah. When the big hailstorm comes over the top.

Speaker C: Yeah, exactly.

Speaker B: But certainly there were some big numbers banded around by some of the big brokers about eight or nine months ago. You know, we're talking about multi billions of new premium coming to market. Are you starting to see some of that trickle through?

Speaker C: Yeah, I think so. And I think the opportunities are there. They're certainly there depending on how bold you want to go. Naturally, from a Munich re perspective, we want to be involved. These are the sorts of topics and discussions which drive us and we've got the expertise to discuss them. That said, we're not going to be out leading a tower because, uh, that's also not within our DNA.

Speaker B: Another really specific one is we've had, well, most of the litigation on those aviation contingent war or war losses coming from the Russia, Ukraine war have now been litigated or some of them have gone all the way to supreme courts in different lands. And lessons have been learned. 1 what are the lessons that have been learned? And is the way that that business has transacted different from the way it was seven years ago before all this stuff happened?

Speaker C: I think it is. This is a topic which, funny enough, I don't think it's got as much coverage as people would expect.

Speaker B: So complicated.

Speaker C: Yeah.

Speaker D: Yeah.

Speaker C: Is fair. Um, and also so litigious.

Speaker B: Yeah.

Speaker C: I think the market has changed and I think if you look at the way that insurers are managing these risks, it comes down to where it's being managed, but then also the coverage and the wordings that go around it, and I think insurers are much clearer now around what those wordings look like. That said, I think what's interesting, and I'm talking here now at a market level, I think there's still plenty of capacity. So given the cost of some of these claims, it's interesting that actually the capacity is still there and it's still a very competitive marketplace. So I suppose what that tells you is the market backs themselves, that uh, the right changes have been made and it won't happen again. That's what it is.

Speaker B: But it wouldn't happen in the same way again, I suppose. Yes. Yeah, well, that's good to hear. But of course it's a really non correlating diversified class.

Speaker C: That's not me saying it won't happen again. I'm just saying what you see is plenty of capacity wording. Changes have been made, structures have changed, but who knows?

Speaker B: Well, we shall see. The world is always finding new ways of surprising insurers, as we know. So, yeah, there's not much we can do about them as long as we don't put our heads in the sands and pretend they didn't happen. That's fair enough. You've already mentioned a bit about AI, but we can't sit in 2026 and not talk about it. And also, whereas, uh, I probably started asking this as a standard question that I would ask everybody about 2023 whenever sort of chatgpt started to uh, explode into the world's consciousness. But now I can ask a slightly different version of that question is whereas two years ago you would have said, hey, we're experimenting with loads of things, I think now you'd say we have experimented with some things and I can tell you which ones work the best or which ones we found work the best and which ones we're getting the actual proper return and we're happy with the way it's gone. So what have been the best use cases so far?

Speaker C: So I think, uh, there are plenty of use cases that we've got in the marketplace around adoption. Now. All roads lead to data, all roads lead to how do we make unstructured data turn into structured data so it can then be used in a more efficient way by our people? And there are plenty of examples of that claims. We see it also ingesting all the data and then making our people's lives a lot easier because they don't have to spend so much time managing all this data that they've got. When I joined the industry all I heard about was legacy systems, how do we get all this data off our legacy systems? And that's now becoming more of a thing of the past because that is happening. I think the bit which is more unspoken about to me is we speak about things at this macro level, but actually when you drop it down to people and how do you talk to your people as leaders, how do you talk to your teams around what does AI mean? And one of the conversations that funnily enough I had this week with a number of senior people in the market was people want to understand how their leaders are using AI on a day to day basis. And I don't mean in terms of the modeling that's done or the programs and software that are supporting them, but how is your day to day life impacted by AI? And I reflected on this conversation and there's a couple of Fridays ago, it's about 4 o', clock, I could hear my family downstairs, their weekend had started mine.

Speaker B: Hadn't you working from home?

Speaker C: Yeah, not every Friday, but this Friday I was.

Speaker B: So yes, children had come home from school.

Speaker C: Yeah. And I could hear them. But I had a pretty major business decision to make and I had to make the decision do I go left or do I go right? And yeah, it was a pretty significant decision that ah, had to be made. And so I decided, right, I'm going to ask Copilot. So I put onto Copilot I put all the documents that were helping me to consider which way I went, put all of the facts in all the documents and I said I'm thinking of going left. This is how I've made my mind up. This is the facts that I've pulled through. What do you think? Now we all know that AI is bias. So it came back and it went, Stephanie, that is absolutely the right answer

Speaker B: because it's always sort of sucking up

Speaker C: to you, isn't it?

Speaker B: I find.

Speaker C: Yeah, yeah, absolutely that is the right answer. Uh, you have gone to all the right pieces within that documentation to help you get to the right answer. They're the facts.

Speaker B: If you change your prompt saying I'm turning right or left. Exactly, and that agrees with you again.

Speaker C: So then that was the interesting bit. So I said, well actually I'm going to go right. And I think I'm going to go right because I'm going to base it on this, this and this. And it was really interesting because it said Okay, I will help you substantiate your decision and I will strengthen that argument for you. And I was like, oh, my God. So then I said, well, now you've put me in a really difficult situation. I don't know now whether to go left or whether to go right. And so it came back and he said, you should maintain your initial decision to go left and you should do it for all these reasons. And would you like me to put this all in a document for you? So it's ready to go and ready to be formatted. That was unbelievable. And I just think you have to test it. You have to test what it's saying and it isn't a case of I'm going to prompt one sentence and, um, I'm going to get this magically appeared decision. It doesn't work like that. You have to prompt it. Right.

Speaker B: Certainly it's a useful tool.

Speaker C: Yeah.

Speaker B: These days because if I'm coming back to interview someone who I interviewed three years ago now, I can just drop the audio file into that box and it sort of whirs away rather than me listening for a whole hour. Yeah, it's, uh, summarizing everything that was said and I can interrogate and go, what did they say about cyber back then? You know? Yeah, it makes some crazy this, you know. Yeah, it's incredibly useful from that sense.

Speaker C: Um, but it does also go wrong.

Speaker D: Right.

Speaker C: Like I just been away on business travel and I gave it a prompt and I said, please pull up all the emails I've missed over the last 48 hours. And it didn't. It gave me a load of emails. And I was like, but you've missed out these two fundamental emails when you know there's one. And they put, oh, yes, Stephanie, you're absolutely right, I did miss those. I'm like, so it's definitely not foolproof.

Speaker B: I wish it book all my travel for me because it's pain and what's it, you know, checking in and just reminding yourself, m. I find it, you know, it's exhausting. So that would be a wonderful thing. But if you get it wrong and forgot to book it for you or whatever, then yes, we'll get there in the end.

Speaker C: I think what is hugely different right now is 12 to 18 months ago, I was probably quite fearful of AI. I was probably in that camp where I was like, what's going to happen? I then got asked to do this tech keynote speech at uh, an Insuretech and I was like, wow, what on earth am I going to say? But Actually, what it did was it was almost like that catalyst of just made me say yes to every invite I got about AI, whatever it was. And, um, by no means am I an expert, not at all. But I think what I've learned is that people talk a lot in the

Speaker B: macro and just use it.

Speaker C: And actually you just need to just start using it and just get prompting it, learning it day by day, just becoming comfortable with it. And that has made, I think, a big difference.

Speaker B: What about the emerging AI as a new casualty peril? It's great when I'm talking to a liability underwriter that's good. Former liability broker talks of liability underwriter M about this. Obviously it very clearly in a tech E and O peril and it's currently silent. Although I've been reading about there are ISO endorsements being used in the States starting to appear. So I don't know what your view of this, whether it will become a, uh, standalone because it gets excluded from everywhere else and becomes a standalone, or will it just be a positive affirmative standalone because people want that very specific cover and it's too limited when it's sitting somewhere within your general liability, within your professional indemnity. You think, well, I would like to have a proper limit and an affirmative acceptance that we can have claims which are, uh, due to the failure of AI and there's some description, look, this

Speaker C: is why we're here as an industry is to answer these types of questions and to move it on and provide the COVID and coverage that our brokers and clients want. The more we exclude AI, the more it's going to become an issue for us. And there has to be an opportunity here to work with AI to move our products on and giving our clients the appropriate cover.

Speaker B: Because it's underwritable, isn't it?

Speaker C: Of course. Like everything's underwritable. And it has to be because otherwise we're taking ourselves out of a job.

Speaker B: And the other question is, can it be excluded because it's so embedded? The sort of thought experiment I've been using would be, I don't know, 1890, whenever Mr. M. Bell invented the teleph. Obviously there must have been a horrific new technology at the time. Especially if you're a liability underwriter. You're saying, oh, goodness me, these wretched telephones. Before, you know, you sent a letter and you signed it and everyone could see what you had signed. There could be some discrepancy about somebody doing fraud or something, or that you thought you'd signed this and you thought you meant that. But at least we both had a document, probably with a copy of the thing we'd sign. And then suddenly people started doing business on the phone saying, buy, sell whatever it was on the phone, or I'll do it for 20% off on the phone. And they thought it was. You said 25% off and. And you start, you know, disputes. You can imagine that you'd want to exclude the telephone from liability at the time, you know, telephone exclusion. But actually, of course, these days no one's excluded telephones because it's so embedded in the way that we live today. Even by the 1940s, everyone, you know, most people in business were using the telephone as a key part of their business. So what do you think about that in terms of AI? If everyone's using AI, it's so embedded in everything, can you actually exclude it and say, you know what? It just has to be part of what we do.

Speaker C: The problem will come, will be when there is a major event where AI was the clear, definitive issue, risk, peril, whatever you call it. And I think that's when you'll start to see market changes and people honestly thinking, okay, how do we work with this? What does this look like? How do we build a production?

Speaker B: When you're talking about it, a couple of hundred million event, and it's absolutely clear as mustard that it was definitely AI. And then you're starting to talk about that carrier or the coinsurance of different carriers and their reinsurers all having a word about this, saying, wow, I didn't know that we were on the hook for this.

Speaker C: Yeah, which is why you've got to start thinking about these risks now. And everybody has probably had AI as part of their emerging risks trends for the business for the last number of years. It's probably been there, but what are we doing about it and how are we looking at things more roundedly to really anticipate what the secondary impacts could be?

Speaker B: But it's too soon. Right now you'd be saying, right, we're excluding it from all liability and all professional indemnity, but we are going to start an AI affirmative coverage unit over here.

Speaker C: So, yeah, I can't sit here and tell you that I've got some definitive action underway, but we are going through asking ourselves, what are the secondary impacts? So, yeah, that is happening.

Speaker B: So it's just slightly too soon, but you expect to see something. We need to be watching this.

Speaker C: I think so, yeah. Yeah. I mean, you see the impact it's having, for sure.

Speaker B: Well, I'll be watching you, Steph. Yeah, I've really enjoyed talking to you. It's been really, really refreshing. Actually, I think I said this before I hit record that of course there's all the technical stuff we're talking about and. But sometimes, of course, you forget that people might listen to podcasts because they want to find out what you're like.

Speaker C: Yeah, yeah. And for sure, Mark, that, uh, is why I listened to your podcast.

Speaker B: Well, listeners would have enjoyed it because you're really good to talk to.

Speaker C: Thank you, that's very kind. No, I've really enjoyed it. Thank you very much for the opportunity.

Speaker A: Well, I hope you enjoyed today's episode. If you did, don't forget to subscribe

Speaker B: or leave a like or a review

Speaker A: or recommendation on whatever podcast platform you

Speaker B: used to access this program.

Speaker A: These really help get the word out. Before we go, just a quick reminder

Speaker D: that advertising slots are available here and in other places in the Voice of Insurance podcasts. Podcasting is the fastest growing medium and attracts a high quality audience of key decision makers. It's also an intimate medium where you, the listener, ah, are right in the room with me and the interview subjects. Needless to say, that means it's a great way of getting your message out directly to an audience because you know you've got their full attention. It's also very cost effective. So get in touch with mark the, uh, voiceofinsurance.com to find out how you could be speaking directly to the industry.

Speaker B: The Voice of Insurance podcast is produced in association with Advantage Go, enabling enterprise

Speaker A: scale underwriting through a single pane of glass. Voice of Insurance is probably produced by me, Mark Gegen. Music was written by Anna Geogan and produced by Carlos Gagan. Check out more podcasts and written comment pieces at www. The VoiceOfInsurance.