Lord Levene of Portsoken: Why the City's Mr Fix-it is confident he can rise to the challenge at Sainsbury

Failure and humiliation have not sat often on the broad, solid shoulders of Lord Levene of Portsoken, the self-made peer with a textbook career in the City. So he will want his part in the biggest recruitment cock-up in recent corporate history to be sorted out as quickly as possible.

The chairman of Lloyd's of London and former Lord Mayor of London is now head of the nominations committee at J Sainsbury. He has to find a new chairman to save the UK supermarket group after Sir Ian Prosser was hounded out by shareholders even before the ink of his signature on the contract had a chance to dry and before he had the opportunity to assume his new role.

Sir Ian's previous corporate failures were considered too difficult to swallow and shareholders these days can be a nasty, unforgiving bunch.

In an astonishing display of vehemence, the Sainsbury shareholders objected en masse to the proposed appointment and the company had to back down, sending Sir Ian away with his tail between his legs. Lord Levene, who has been a non-executive director at Sainsbury's since 2001 and was on the nominations committee, has come in for flak with the rest of the Sainsbury board and he cannot risk another disaster.

"We got it wrong and we have to fix it," says Lord Levene, without a ruffle, from the comfort of his armchair in his office on the 11th floor of the Lloyd's building in London. Not the sort of up-front, spin-free language you would expect from a former personal adviser to John Major (1992-97), the then prime minister, and special adviser to the Ministry of Defence (1984).

This, of course, is not the first time Lord Levene has had to rescue a company - or a Government department - from a tricky situation. He has been a troubleshooter in the private sector - Canary Wharf, the Docklands Light Railway, the Jubilee Line extension - and has enjoyed public offices.

But the Sainsbury situation may be one of the few times Lord Levene has had to defend his boardroom decisions. "We thought we had a good succession plan. Shareholders shouldn't micromanage companies, but if they have views and want to express them publicly, then so be it," he says.

His experience does mean that he knows how to hobnob with the best of them and he has a network straight to the great and the good in the City's powerhouses, which makes the blunder with Sir Ian all the more surprising.

This experience has certainly helped at Lloyd's, where he has been chairman for just over a year. The insurance market is about to report more good results and it is Lord Levene's job to tell the world about it.

He is live, however, to its seismic problems that have sent it lurching to and from the brink of collapse innumerable times, and is determined to consign its antiquated practices to the past.

The market began in 1688 as a collective between wealthy merchants in London and private investors, called Names, who risked their entire livelihoods to secure cargo and buildings all around the world. This continued for nearly 300 years but the Piper Alpha disaster brought many to ruin. Then came the attack on the World Trade Centre, which shook the market once again and caused its biggest ever loss of £1.98bn.

Lloyd's survived the 11 September disaster, which then sent insurance premiums rocketing and insurers have enjoyed record results. A convenient time, then, for Lord Levene to take up the post as he basks in its current successes. "Timing is everything," says Lord Levene, with a wry smile that belies the realpolitik approach behind his business successes.

But insurers can get greedy and take on too much business. Prices get cut, insurers are exposed and the cycle begins all over again. "We've had some good years, but we have to keep doing well. People have got to say they won't join this crazy lemming club. No other business has such huge swings between the good times and bad times," he says.

Lord Levene is bringing in a new "zero tolerance" regime to get tough on reckless underwriters. It has claimed one victim already - Goshawk, which was thrown out of the Lloyd's market last year for its poor reserves.

The son of a dealer in antique silver, Lord Levene is a curious mix of the ancient and modern, much like the iconic Lloyd's building itself. The steel tubes and pipes that encase the building, now nearly 20 years old, was seen as the model for postmodern architecture in 1980s London. But for all the bravery of its cutting edge design, the interior is decked out as an 18th century mansion. Was he daunted about coming into an organisation so steeped in history? "There are people here who have spent their whole lives in Lloyd's and just accept they've always done things this way. But then I was the 761st Lord Mayor of London so that was an office steeped in much longer tradition."

One can have enough pomp and ceremony, however. "Wearing great robes and being carried around in a golden carriage is all good fun for a while," he says. No qualms then about closing the door on the Adam Room, a spectacular vision of 18th century opulence, with regency chandeliers, mirrors, fireplaces, which was the setting for Lloyd's' council meetings. "The table was too big. Nobody could speak to each other," he says. Across the hall, Lord Levene had another room decked out with bland office furniture for the council to meet in. "Much more functional," he says, as he looks around the banal room with a satisfied nod.

The view from the room also allows Lord Levene to see the City sprawling out beneath him once again. Another satisfied nod when he sees the shiny new office towers, home to some of the world's biggest companies, which are pushing their way up into the skyline to the east.

Canary Wharf was still in administration when he joined as chief executive in the early 1990s. "In those days we were desperate to get retailers in. There were only fruit and vegetable sellers who sold their stuff out of barrows.

"We asked Marks & Spencer to come out, but they wanted us to pay them a lot of money to do so," he says. Cut to 2003 and three other towers now shadow the original Canada Square and a second shopping mall, home to Marks & Spencer, has just opened.

But the company is in the midst of a bid battle between Morgan Stanley and Brascan, a Canadian property company. Levene is loath to see it fall into private hands. "This seems like financial engineering to me. It is a very good business and I don't know why they don't just leave it alone," he says.

But the architect of Lloyd's of London's future still has some soft spots for the old ways. "You still have to wear a jacket on the trading floor of Lloyd's. I have to admit I like that. In some investment banks you can't tell who is the janitor and who is the top earner," he says.

A luddite and revolutionary, meritocrat and pillar of the establishment, Mr Fix-it and in some respects, a reactionary. Lord Levene has been a Whitehall greybeard, City of London ambassador, corporate troubleshooter and guardian of traditional business attire.... Somewhere in that mix, he must be able to find someone who is right for Sainsbury's?