Feb 4 - (The Insurer) - Like all venerable institutions weighed by history, Lloyd’s has taken great care over succession planning. In its case, the Corporation has for many years adroitly staggered the arrivals and exits of its most senior leaders to avoid disruption and maintain an inviolable continuity of purpose.

Until now, that is.

Last week’s news that Lloyd’s CFO Burkhard Keese will shortly return to Germany was the latest in a flurry of unexpected exits from the Corporation’s executive team. The question is what has caused this trend and is it a problem?

Keese’s imminent departure (he will join German MGA Konzept & Marketing on 1 May) follows the announcement last month that CEO John Neal will take up the vacant position as Aon’s global reinsurance head, and comes during a handover period for the next Lloyd’s chairman with Bruce Carnegie-Brown retiring in May after almost nine years at One Lime Street.

Nor are these the only notable changes on the executive floor. In August 2024, Lloyd’s COO Bob James was parachuted into the London market joint venture Velonetic to directly oversee Neal’s delayed Blueprint Two modernisation project, with the vacancy since filled on an interim basis by Accenture’s AI specialist George Marcotte.

The Corporation – the body tasked with managing the near-350-year-old market – has not experienced this level of executive turnover since at least the Lloyd's Act of 1982 and perhaps even since Edward Lloyd began percolating his coffee. It is even possible four of the five most senior Corporation leaders will have changed in under a year – assuming Neal is released early from his 12-month rolling contract to avoid any tensions emerging from his next destination (no details have been released on his leaving date – another sign, perhaps, that his departure was unexpected).

The only constant is chief of markets Patrick Tiernan, who has returned to his post after a brief health-related absence last year. However, even that position may become vacant later this year if he is successful in his ambition to succeed Neal as CEO.

It is certainly a far cry from the previous model of stable succession planning. Since 2000, for example, Lloyd’s has had only four chairmen (Sax Riley, Lord Levene, John Nelson and Carnegie-Brown), four CEOs (Nick Prettejohn, Richard Ward, Dame Inga Beale and Neal), four underwriting heads (Rolf Tolle, Tom Bolt, Jon Hancock and Tiernan) and five CFOs (Bob Hewes, Andrew Moss, Luke Savage, John Parry and Keese). As the timeline below demonstrates, their arrivals and departures were managed to ensure continuity of senior leadership. In any one year between 2000-2024, only one of the top four executives left. Only rarely – such as when Hancock left in 2020 for AIG – was there a significant hiatus before a replacement was announced.

In one sense, we shouldn’t be too surprised. Under Neal’s stewardship, there appears to have been a marked increase in the turnover of Corporation senior staff. This is perhaps natural at the beginning of a CEO’s tenure – however, in Neal’s case it seemed more of a continual theme. 2023, for example, saw the sudden departure of two members of the Corporation’s managerial ranks: long-serving general counsel Peter Spires and marketing and communications head Jo Scott. Both were effectively replaced by junior Corporation colleagues (albeit Scott temporarily remained with a reduced role overseeing charitable donations) who were assumed to be closer to Neal. James – another trusted Neal lieutenant from his time at QBE – was elevated to the vacant COO role following the exit of Jennifer Rigby the previous year.

Does all this turnover matter?

On the face of it, the Lloyd’s market is in rude health. In March, the Corporation is expected to announce another set of strong underwriting results for the ~100 syndicates that trade on the platform. Keese’s successor has already been identified in the form of his number two, Alexandra Cliff. Lloyd’s remains an attractive place to access wholesale and specialty business and the queue of aspiring entrants is said to remain healthy. Of course, rate pressures are growing in many classes but there is no sign yet of a return to the soft market nadir of 2016-2018. The venerable ship – which celebrates its 350th anniversary next decade – is back on course after the traumatic underwriting losses of 2017-19.

But the vicissitudes of the risk business means the waters rarely stay calm for long – as we were reminded in California only last month. Catastrophic loss events – as well as geopolitical and economic storms – occur too frequently to indulge a leadership vacuum for long at a marketplace as important as Lloyd’s.

However, the uncertainty of when Neal will go – and who will replace him – is complicated by the impending exit of his chairman. This departure was at least planned. Carnegie-Brown’s final term of office expires in the summer and his successor, the former McKinsey senior partner and civil servant Sir Charles Roxburgh, was identified last year following a thorough process.

However, the sudden announcement of Neal’s departure has created a dilemma. Will it be Carnegie-Brown or Roxburgh who ultimately decides Neal’s leaving date? The situation is complicated by Neal’s decision to join Aon, one of the market’s largest and most influential producers. The longer he stays, the more Lloyd’s will have to tread carefully in decisions that affect Aon’s competitors to avoid any accusations of favouritism. If he goes prematurely, Lloyd’s may need to find an interim replacement – which could also affect the process to select a permanent successor.

Committed, long-term leadership is also required to address two of the more vexatious issues during Neal’s tenure: modernisation and culture. The former hinges on Blueprint Two, which has likely cost more than all the infamous Lloyd’s white elephants of the past – such as Kinnect and TOM – combined. Neal and Carnegie-Brown are leaving with no official costings to date published, but there are fears it exceeds £500mn all in along with continued concerns over its delivery. Should it be shelved?

Surely not, but a clear pathway of deliverable success needs to be presented to the market following the tensions that emerged last year between the influential trade body, the Lloyd’s Market Association, and Neal. This can’t be delayed for much longer.

On culture, Lloyd’s has recently closed a market consultation on toughening its investigation powers following the failures of the Atrium/Richard Tomlin affair.

Neal positioned himself as a reforming culture crusader during his time at Lloyd’s. Politically, this was smart considering the damaging Bloomberg investigation alleging widespread sexual harassment shortly after he arrived.

But the delivery didn’t always appear consistent.

Atrium was hit with a record £1mn fine and an exposé of a “boys' night out” culture, while a few years later CFC Underwriting was allowed to discreetly change its senior management and avoid any embarrassing revelations of its own culture shortcomings.

Closer to home, Lloyd’s quietly parted ways with a number of unnamed executives in its performance directorate in 2022 following suggestions of whistleblower complaints relating to conduct and behaviour. Shouldn’t this also have been subject to the cleansing light of transparency? And what of the Corporation’s apparent deteriorating performance in the most recent annual market culture survey?

This is all on Neal’s watch rather than his yet-to-be found successor, but someone still has to decide whether to proceed with the proposed tougher rules despite concerns – likely to have been echoed in the consultation – that they may result in regulatory over-reach and potential injustice. Should this be an exiting chairman and CEO or the new leadership team? Surely the latter.

In summary, it’s been a month since the market was blindsided by the news of Neal’s resignation. This – together with the chairman handover process – no doubt explains the delay in announcing an agreed exit date. But Lloyd’s needs to resolve the current leadership limbo swiftly. Once achieved, perhaps it also makes sense for the Corporation to return to the policy of stable succession planning…

In response to some of the points raised in this article, a Lloyd's spokesperson said: “Lloyd’s executive committee remain aligned on the Corporation’s strategy for 2025 and on the execution and delivery against the key priorities of performance; digitalisation; purpose and culture.

“Following John Neal’s decision to step down as CEO of Lloyd’s in 2025, a rigorous process to recruit has successor is now underway. A formal departure date will be agreed in due course, and John will work with incoming chair Charles Roxburgh and Lloyd’s executive committee to ensure a smooth transition.

“Alex Cliff will take over from Burkhard Keese, following his decision to step down as CFO at the end of April as part of a well-executed succession plan. She is a well-known member of the leadership team and well-respected deputy CFO, having been at Lloyd’s for over three years.”