Sax Riley

Chairman who revolutionised Lloyd's
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The Independent Online

Saxon Riley, insurance broker: born Manchester 11 February 1939; deputy chairman, Lloyd's of London 1999-2000, chairman 2000-2002; twice married (two sons, one daughter); died Woking, Surrey 25 July 2003.

Sax Riley was the quiet revolutionary who completed the transformation of Lloyd's of London from a gentlemen's club into a truly professional organisation, controlled by institutional shareholders and not by individual "names". His death came only a few months after he left office as chairman, having overseen the last stages of the profound revolution which transformed Lloyd's.

The most unclubbable of men, who "kept himself to himself", as a colleague put it, Riley was at first sight totally unsuited to the job. When he became chairman in 2001 he was totally unknown. "He never really talked about his life," said one former colleague, "except Lancashire. He was always talking about Lancashire cricket and what went on in Lancashire. He himself 'played with a dead bat' and was obsessively private." He was a true - and occasionally professional - northerner. Confronted by a pretentious speaker, he would say, "Where I come from, marmalade is a long word." Among the compliments paid on his death was one from Nick Prettejohn, chief executive of Lloyd's, who referred to Riley's "wonderful sense of humour and splendidly forthright style".

His personal life was largely confined to his family and a handful of close friends, with whom he spent much of his personal life in local pubs and on the golf course near his home at Amersham. Because of his reclusiveness - he was probably the first chairman of Lloyd's not to be in Who's Who - he tended to be misunderstood. So when he became deputy chairman in 1998 and interim chairman, initially only for a year in 2001, opinions were often hostile, and invariably lacked an understanding of his quiet determination. He was dismissed as "a good retail figure who happened to find himself chairman". But he had already proved himself far more than that.

Riley was the consummate professional, the total antithesis of the traditional upper-class Lloyd's chairman. Born in West Didsbury, Manchester, in 1939, he attended Chorlton Grammar School where he was a noted sportsman. After National Service, he joined Cornhill Insurance in Manchester before spending some years at the family broking firm of Scholfields. After moving to Price Forbes, he worked in Johannesburg, where he began his rise, and on his return to London developed the firm's business with major corporate clients.

A series of mergers saw him first chief executive and then chairman of the major firm of Sedgwick's. There he decided that the company was not big enough to cope with the competition and sold out to Marsh McLennan. When the deal - an exceedingly profitable one for his shareholders - was announced, Riley showed his characteristic realistic attitude: "We set out our stall to be global many years ago and we need a strong partner to do that." After the merger, Riley had some time on his hands and, following lengthy badgering by his colleagues, he joined Lloyd's ruling council in 1999 and was immediately appointed deputy chairman and then, from 2001, chairman.

At first sight he was not a natural chairman, hating the globe-trotting, ambassadorial role which goes with the job. By contrast his negotiating skills and his usually well-hidden sensitivity proved ideal weapons during his term in office - which extended to two years to enable him to carry through the profound reforms he had initiated. As he said, "I'm going to sort out the bloody market." And he did. Much of the work - including the introduction of corporate instead of individual capital - had already been done, but the revolution was by no means complete.

His first, and most challenging, test came in the aftermath of the attacks on the World Trade Centre on 11 September 2001. At first he didn't believe the news. He was at Nice airport on his way back to London and "dismissed it as a Steven Spielberg film". He was soon confronted by two grim realities. The first was personal: "People were numb," he said. "They walked around for a few weeks like zombies." Five hundred employees from two broking companies, Aon and his own former firm Marsh McLennan, had lost their lives while working in the World Trade Centre. The second, of course, was financial, since Lloyd's had already lost up to £2bn from 1999 and 2000 and stood to lose as much again from the events of 11 September, giving rise to fears about Lloyd's stability.

At first Riley said nothing in public, though he visited Ground Zero only a few days after the tragedy. Then, on 13 September, in a speech made before the Lutine bell was rung at Lloyd's, as was traditional to signify a major disaster, he spoke movingly, saying that, on a professional level, "This tragedy has far-reaching implications for many types of insurance, aside from appalling loss of life and the obvious property and aircraft damage. These are simply unquantifiable at present." But he ended with a very personal plea, for the world's leaders to expunge the word "hate" from their vocabularies and replace it with "trust".

Riley's place in the history of Lloyd's was secured by the way he steered through fundamental reforms to the institution's structure. Originally, this was concentrated on the need for an increased capital base. He also proposed the abolition of the individual "names" who by 2000 accounted for only a fifth of Lloyd's capital. However, faced by fierce opposition, he and his colleagues backtracked and allowed them to remain. His attitude, as expressed in a speech in March 2002, was simplicity itself. As he pointed out, "Since 1994, Lloyd's has been involved in a process of change that has seen it saved from the brink of collapse and brought it to where it is today - a modern, corporate, international business backed by some of the world's major insurers." But, he added, "The world does not stop moving, so neither can we."

His chairman's group had

three key principles in mind: profitability, transparency and modernity. Profitability because Lloyd's can no longer sustain financial performance which goes from profit to a heart-attack every five years . . . Why efficiency? Many of the systems Lloyd's uses date right back to the market's somewhat creaky foundations . . .Why transparency? Knowledge makes all the difference between a sound investment and a gamble.

Hence the idea of annual accounts and, most fundamentally, the formalisation of the Lloyd's franchise . . . In the past, we've used the term franchise in a loose sense - as a description of the benefits that membership of Lloyd's brings.

He was proposing "a contractually binding franchise with Lloyd's centrally acting as franchisor, and managing agents becoming franchisees. People, when they hear the word 'franchise' tend to think of fast food outlets." But, he insisted, there was "a high-value end to the retail franchise market . . . Lloyd's as franchisor will be allowed some degree of control, over the underwriting of its constituent businesses." Previously "the actions of a single syndicate could tarnish the market's reputation". Through what amounted to a licensing system, Lloyd's council could prevent problems rather than react to them.

Riley ended by quoting

a famous politician who once said, "He who rejects change is the architect of decay." The only human institution which rejects progress is the cemetery . . . I don't know about you, but I'm still too young to be in a cemetery.

Nicholas Faith