Insure hands: Sean McGovern, Lloyd’s of London
28 July 2008
When Sean McGovern joined the legal practice at Lloyd’s of London in 1996 he was just 26. In 2000 he was promoted to head of legal and in 2003 he became Lloyd’s worldwide general counsel and a member of the board. His promotion at such a young age raised some eyebrows in both the insurance industry and the legal profession.
“It was a challenge,” he says now. “I was only 29. In fairness to Lloyd’s, it was a testament to the fact that they were willing to promote from within.
“I was a relative newcomer, having been here for four years – I was six years’ PQE. I think the biggest challenge internally was the fact that I had to build up the trust and confidence of a wide range of stakeholders.”
These included a 60-strong legal team, where he was among the youngest, a boardroom filled with some of the best business minds in the financial world and the cynical legal market itself. “I had to build up credibility very quickly,” he says.
When McGovern joined the insurance market in 1996, it had just recovered from the brink of collapse as a result of billions of pounds worth of asbestos-related claims dating back to the 1940s. The future was looking rocky.
The Lloyd’s management was charged with regulating the market, which made the legal practice a central function, as its team not only had to conduct internal investigations, but also faced a series of charges from the US. At that stage the market was supported by 30,000 members who supplied 90 per cent of capital.
Twelve years on and Lloyd’s has reported record results. The Lloyd’s Act 1982 is on the edge of major reform. Lloyd’s has repositioned itself to attract more corporate capital and today 85 per cent of capital comes from the commercial world.
Sitting in his glass-walled office in the upper echelons of the iconic Lloyd’s building, McGovern acknowledges that his role involves “quite a mixture” of disciplines. His responsibilities include a 25-strong UK legal team, led by head of legal Peter Spires; an international regulatory team staffed by 40 people and led by Rosemary Beaver; a government affairs team headed by Alastair Evans, which
is responsible for relations with Downing Street and the European Commission; a compliance function, which deals with the Financial Services Authority; a relationship management team, which looks after internal relations in the market; and finally a US-based legal practice of five.
McGovern took responsibility for the market’s international regulatory affairs in 2007. Since then he has found himself discussing climate change with Arnold Schwarzenegger, speaking ;with ;the ;New ;York Governor David Patterson, and, on the day we meet, holding court with Florida Governor Charlie Crist.
“There’s a recognition that Lloyd’s is a major provider of insurance and reinsurance in the US – it’s a major market for us,” McGovern explains. “It’s in our interests to make sure we engage with the governments of the key states, and it’s in their interest too, because we’re a key provider of capacity to the market.”
To illustrate the point, Lloyd’s underwriters ;paid ;out ;$10m (£5.01m) in claims after Hurricanes Katrina, Rita and Wilma hit the Gulf Coast in 2005.
McGovern is keen that much of Lloyd’s’ legal work is kept in-house – something that possibly has more to do with him and his team having control than the cost of outsourcing.
When ;required, ;McGovern instructs Freshfields Bruckhaus Derringer for major litigation work, Baker & McKenzie for employment issues and Beachcroft for property work. But, he says, this is rare.
It is clear that McGovern is a loyal Lloyd’s man. The London market showed its faith in him when he was just 29. It was right to do so. McGovern’s direct approach sees him lead by example, and this philosophy puts the practice at the heart of Lloyd’s’ future success.
“One of the great things I’ve been able to see is that the legal department has moved on from clearing up the problems of the past,” he reflects. “Since 2000 we’ve been working very hard to position Lloyd’s on a much stronger basis. For example, we’ve now raised £1bn in the debt market to further strengthen Lloyd’s’ capital structure – two tranches of £500m.
“If someone had said to me in 2000 that Lloyd’s would be raising money in the capital markets, people would have thought that unlikely, because Lloyd’s didn’t have the creditability and was too opaque.
“We worked very hard to make sure the Lloyd’s story is one which investors will understand – and that’s been a major step forward.”
Name: Sean McGovern
Organisation: Lloyd’s of London
Position: Director and general counsel
Reporting to: Chief executive Richard Ward
Gross profit (2007): £3.85bn
Number of employees: 800 worldwide
Legal capability: 30 lawyers (25 in London, five in the US)
Legal spend: £3m (estimate)
Main law firms: Baker & McKenzie, Beachcroft, Dewey & LeBoeuf, Freshfields Bruckhaus Deringer
Sean McGovern’s CV
1988-91: Degree in Law, Manchester University
1992-96: Solicitor, Clifford Chance, London
1996-2000: Solicitor, Lloyd’s Legal
2000-03: Head of legal, Lloyd’s of London
2003-present: Director and general counsel, Lloyd’s of London