Lockton Re targets further growth after revs rise 35% in FY24 to $283mn

Lockton Re remains firmly on the hunt to add additional talent and capabilities as the reinsurance broker looks to build on the 35 percent growth to $283mn of revenue it booked in its 2024 financial year, Tim Gardner has told The Insurer.

In an interview with this publication in the lead up to this year’s Rendezvous de Septembre in Monte Carlo, Gardner, who serves Lockton Re as CEO, said the reinsurance broker is “ahead of target” when considering the platform’s growth since he took the business’ helm in 2019.

It is now just over five years since Gardner, Claude Yoder and Nick Durant joined Lockton Re with the plan to reboot the business and establish it as a true challenger to the established big three brokers at that time, consisting of the trio’s former firm Guy Carpenter along with Aon and what was then called Willis Re (now Gallagher Re).

Following Gardner, Yoder and Durant’s arrival, they were soon joined by several other senior reinsurance broking figures like former JLT Re executives Keith Harrison and Ross Howard, while Bob Bisset arrived from Aon.

“We’re ahead of target,” Gardner declared, “and that’s through four lenses – revenue, profit, headcount and capability”.

Through the 12 months to the end of April when Lockton’s financial year closed, Lockton Re generated $283mn of revenue, growth of over a third when compared with the $200mn-plus it booked in its 2023 financial year.

Over the past year or so, Lockton Re has added another approximately 100 staff to its ranks, with the reinsurance broker’s headcount now north of 450.

Ahead of schedule

“If I reflect on where we are from a capability standpoint relative to where I thought we'd be, we definitely feel like we're ahead,” said Gardner.

“If there's an opportunity, we have the team, we have the analytics, we have the credibility, and we've got the marketing clout. We can go toe-to-toe with anyone, and we do all the time.

“We're not afraid to dive into an RFP against anybody, anywhere at this stage, and I'm not sure I would have thought I'd be able to say that in the first five years,” he said.

“Five years ago it was a lot higher bar for a client to appoint Lockton Re [because] we were unproven and we weren’t as well known,” said Gardner.

“Fast-forward five years to today, and we’ve got far more credibility. We’ve got brand reputation now with a performance track record with many of our clients.

“We’re trading close to $5bn of reinsurance premium into the market, and so we are becoming a meaningful trading partner to many of our reinsurance partners,” the Lockton Re CEO added.

Globals focus

Lockton Re is one of several reinsurance brokers formed in recent years to provide an alternative to the historic big three of Aon, Guy Carpenter and Willis Re/Gallagher Re.

Gardner said part of Lockton Re’s success to date has been on its industry focus. Whereas other challengers to the big three may have put their efforts on one-off capital markets-backed deals, programs/MGA business, regionals or mutuals, Lockton Re has targeted the biggest buyers of reinsurance.

“We’re predominantly a treaty business, and our largest segment is the globals, and that’s not really what the [other challengers] are focusing on.”

And, according to Gardner, that focus has paid off.

Haves and have-nots

“There was a lot of excitement and enthusiasm five years ago about the reinsurance broking space. [People were saying] ‘Oh, the market is opening up, and the oligopoly is finally showing some cracks and start-up brokers can make a real play’.

“What we’ve seen recently is the haves and the have-nots coming out of that space. I do think there's been a real parting in terms of who has been able to have a value proposition and a business thesis that carries water and has some sustainability, and we feel good that we're in that conversation,” said Gardner.

There were several reasons Lockton Re focused on the large, global cedants, the executive explained.

“One, Lockton has a strong inward relationship with a lot of carriers, so that makes sense. Two, it's a space that a lot of us came from and many of us on the leadership team had worked with larger buyers in the past, so we knew them well and they were relationships for us.

“Three, they tend to be the biggest buyers of reinsurance and so that’s a good place to start. And four, if you can build the capabilities to serve that customer base – they're large, really complex, demanding, analytically reliant – it cascades remarkably well to the rest of your business.”

As a result, while Gardner said the global carriers “are a big part of what we do”, Lockton Re also supports clients across the reinsurance-buying spectrum, such as single-state doctors companies and regionals/mutuals in the US, while the broker recently opened a global agriculture business with the hire of Kristopher Lynn from Terra Underwriting Management.

Under Gardner’s oversight, Lockton Re has broadened its capabilities and client reach to such an extent that the executive said there are not really any areas of the industry where it does not play.

Further hires eyed

However, as Gardner noted, Lockton Re is not saturated in any one segment, and so the business is always looking to grow and add new talent.

“Our segments are in very different stages of life. If you think back five years ago, we started with the anchor of property, casualty, professional, healthcare, and in London with marine, energy and aviation.

“So we've had five years to build and enhance that value proposition. Others, like agriculture, we’re talking just weeks old.

“We want to add to all of them. We're always looking for talented people that fit our platform in any of our segments because they're going to help us be better,” said Gardner.

“We see opportunities in every geography and every product that we’re pursuing,” declared Gardner.

The executive said Lockton Re’s management feels very positive about the capabilities the reinsurance broker has built and is “thrilled” with the people that have come on board.

Lockton Re remains committed to further building out its roster, and Gardner said the reinsurance broker is more interested in bringing in one or two individuals to ensure its culture is not disrupted.

“We want to make sure someone is a fit for us, and we're a fit for them.

“If we can get ourselves comfortable that they're really a good cultural add, the rest of the conversations tend to go very quickly. But you just can't do that if you're hiring huge teams [because other than the] top five individuals, it is unlikely that you get to know the rest, and that’s just not us.”