Below is Mr Major’s speech at the opening of C E Heath’s new offices in Houndsditch, London, on Thursday 21st November 1991.
Thank you very much for the invitation to come here today. I remember this old warehouse many years ago. It seems to have undergone something of a transformation. It certainly looks like a space age building from the brief sight of it I’ve had coming in and I’m very pleased to have the opportunity today to open these very splendid new premises in which I understand all of you in due course will be working.
I had the invitation to come some months ago. I was with Derek Newton at the time. We were watching some cricket. I was working, I don’t know what he was doing. It was a lovely summer’s day at the Oval. Surrey were winning – it would have been impossible to say no to the invitation. I must say looking at this garden around me I’m not at all sure I don’t feel I’m back at the Oval once again. But it was very nice of Derek to invite me.
He also explained to me some of the history of the firm and of course its remarkable founder, Cuthbert Eden Heath. Some of those names are as familiar to me as they may be to you. Indeed I’ve only just finished listening to one of them. And a very remarkable performance it was.
But C E Heath is known today, throughout the insurance industry, as “the Father of modern Lloyds”. And from all I know of him it is a well deserved reputation. He was a very remarkable financial innovator.
Over one hundred years ago he founded the firm. The record of innovation which he subsequently built up was formidable. Though not the inventor of re-insurance, he developed the export market considerably. He did introduce insurance policies against new risks. He did move out of conventional insurance against fire. He offered insurance against theft. And against loss. And was the first to develop “block” insurance policies to cover all risks.
That is a very formidable record, indeed, and is one that can justly be claimed by your company. But he is of course a very significant historical figure in this field. One history of Lloyds of London summed up the essential character of C E Heath in the following way. And it began with a story which I understand was not apocryphal. It began with his father Admiral Heath.
Admiral Heath told his son about a difficulty in obtaining reinsurance cover abroad. The son saw – and I quote – “no reason why he should not help with a re-insurance treaty”. Now as the book points out, the key phrase is “saw no reason why not”.
That attitude characterises the spirit that C E Heath actually brought to the insurance industry. Other men perhaps presented with the same situation for the same unusual inquiry would have found reasons for not accepting it. C E Heath found the novelty an attraction not a deterrent.
That illustrates the sort of spirit and innovation that is always so vital in business. And nowhere perhaps more important these days than in the highly competitive and highly innovative field of financial services.
And those initial instincts of your founder have been kept alive by the attitude of the firm over the last 100 years. It now ranks, I understand, 11th in the world league of insurance brokers. It is the largest independent British insurance broker. It has made three significant acquisitions in the last 5 years. And from 3 locations around London you now have this splendid building in which all 700 staff will work.
But it does of course a great deal of its business overseas. And insurance broking is one of the great strengths of the UK financial services sector. Last year, broking contributed over £800m to our invisible earnings and that is 40% of the total contribution from the insurance industry.
And I can tell you as an ex-Chancellor of the Exchequer that invisible earnings is a wonderful expression. But it is also a bit mysterious. It always sounds more reminiscent of tax evasion or criminal activity than a major contribution to our balance of payments. And it certainly demonstrates why statisticians are known for their numbers and not for their English.
But, whatever it is called, we need that contribution. We need it for our economy and we need it for job creation for the 90s and beyond. And as we look down the long tunnel of the 90s it is a decade that will offer unparalleled opportunities but also the most tremendous competition and challenge.
It will not be an easy decade for those who are not innovative and are not competitive. For the competition will be faster and harder day by day than we have ever known before.
Insurance ought to be an inherently international business. It is about taking and spreading risk. And an international spread of risk often makes sense. But some of the barriers to doing insurance business, even in other European countries, let alone further afield, are only just beginning to come down. But that they will come down I have no doubt, whatsoever!
The Single Market offers new opportunities to many sectors. And as part of the Single Market programme new life and non-life insurance framework Directives are now proposed. They will help to create that Single Market we want and need in insurance. The Directive that will do that is still being negotiated. It will be, as the Duke of Wellington might have put it “hard pounding” to get. But get it we will; and we have to persuade our other partners in the European Community of the merits of that particular Directive.
But as the competition intensifies in Europe and worldwide we do have in this country one priceless advantage over actual and potential European competitors – and that priceless advantage which we should never spurn or lose – is the international fame and standing of Lloyds of London.
It is at the heart of the London insurance market. It holds a worldwide reputation for innovation and for the security that unlimited liability brings. A great deal I know, is made particularly by those at the heart of the problem, of Lloyds recent underwriting losses. I know for some they have been serious but they do need to be seen in perspective. The 1988 losses, the first for 20 years since 1967, were fully covered by increased reserves for liabilities. And those reserves will place the market in a much stronger position. And the important point is that Lloyds knows the future lies in expanding abroad.
And it is looking to the future and it is preparing itself for that future – to the opening of those new markets in Europe and overseas. And my goodness how your founder, if he were here, would be licking his lips at the thought of those markets and opportunities in the 1990s.
Last year Lloyds entered into a financial venture “Eurosure” to take advantage of the opening of cross frontier trading in insurance business. It is actively seeking to extend its overseas representation both in Europe and elsewhere. And I do not have a single shred of doubt that UK insurance can face up to the more challenging world of the 1990s and take markets abroad that currently are in the hands of other people.
And because of its formidable history, reputation and current practice CE Heath will continue to build up its own reputation at home and abroad and build up its own business. And it’s for that reason, because of what the firm has been, is and will become that I am so pleased to have been bribed in such a shameful way on that sunny day at the Oval.
I am delighted to be able to come here and open these new premises. I saw, as I came, in that open lift which comes down over there. And I looked round at what I have no doubt is a building absolutely stacked to the gills with the latest elements of high technology. But I have to deal with a bit of low technology.
So I’ll pull this and declare the building formally open.