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Lloyd’s of London CEO warns of belt-tightening ahead

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A 10% cut in corporate headcount and continued focus on costs will pave the way forward for Lloyd’s of London, according to the corporation’s semiannual email to the market from CEO Inga Beale.

The letter discussed market conditions and Lloyd’s responses to them, the most notable being upcoming redundancies.

Ms. Beale said the corporation expects the market to shrink in 2017 and 2018, and that this would require Lloyd’s to adapt.

“Different ways of working require different structures,” the email stated. “As well as some internal reorganization, this will involve a reduction in head count of around 10%.”

The message added that Lloyd's would attempt to “redeploy” some workers in different parts of the firm and offer voluntary severance to others.

Against this backdrop, work continues as Lloyd’s girds for Britain’s withdrawal from the European Union and readies operations in Belgium.

“We are strengthening our relationship with the Belgian regulator, and in September we will submit our application for the Lloyd’s Brussels company structure, our working capital and operational model,” said the email.

Ms. Beale also addressed efficiency and market performance issues.

Improving performance, she said in the email, “means the market should shrink in 2017 and 2018 as underwriters maintain strong discipline.” Distribution and administrative costs were said to be “unsustainable.”

“While progress against our objectives in 2017 has been encouraging so far, the fact we are expecting the market shrink this year and next shows there is still a performance gap to address,” said the message. "To close this gap, syndicates must exercise strong underwriting discipline, improve efficiency and reduce costs.”