Lloyd's of London (B): A New Structure for Lloyd's?
If any institution took pride in its flawless reputation and used this as a competitive asset, it was Lloyd’s of London. One of the oldest extant businesses in the world, Lloyd’s was founded in 1688 by Edward Lloyd in a London coffee shop. Its company history is both heroic and mythic, Lloyd’s having aided the rise of Britain as a maritime and economic power by providing insurance to its merchant fleet. Until 1993, the essential structure of Lloyds and its business methods were largely unchanged from its founding. It had however, distinguished itself as a market leader in innovation in the insurance industry. Whether it was war risks, million-dollar racehorses, film stars’ legs, rock star’s voices, or orbiting satellites, it could find coverage at Lloyd’s. Despite a history of profitability, innovative underwriting and a large expansion in capital base in the 1980s, in 1993 Lloyd’s was foundering in record losses, legal disputes, and internal division which made its continued existence extremely doubtful. How and why had a market leader for nearly 300 years stumbled so badly? This case is available for purchase from ECCH.