Interview: Neil Nimmo: Thinking nimble, staying stable

Amid the storm of uncertainty that has raged throughout swathes of the insurance broking sector of late, Lockton has continued to set an unassuming course towards growth, however, a period of change is on the horizon.

The past 10 years at the privately-owned broker have been a picture of stability under the stewardship of company stalwart Mike Hammond, who has held the position of UK and international CEO since the acquisition of Alexander Forbes’ international business in 2006.

During that time, Lockton has grown to become a £1.3bn business and is on course to hit the £2bn marker in the not-too-distant future.

Impressive financial performance, an enviable reputation in its chosen specialisms and a fierce focus on client retention has enabled Lockton to cement a hard-earned spot among the great and the good of the global broking community.

Consistency has long been the name of the game at an organisation that has often flown under the radar of publicity, while at the same time winning industry acknowledgement for its work in commercial lines broking.

Undoubtedly a big part of the firm’s past success, Hammond will step down from his role as boss of the non-US business on 1 May to take on the position of executive chairman of Lockton International, with his outgoing remit passing to current international operations deputy CEO Neil Nimmo.

While quick to praise his soon-to-be predecessor for the progress delivered during his decade in charge, Nimmo intends to make his own mark and is targeting growth both geographically and from a business lines perspective.

Steady ship
He is adamant, however, that his plans for the future prosperity of Lockton outside the US will not destabilise what has for many years been a steady ship.

He says: “In terms of the ‘Locktonisation’ of the business to where it is today Mike has done an incredible job. He has overseen the transition from a limited company to an LLP, he has brought in a partnership culture and the focus around the client and all that entails.

“I want to continue to build on that, with the adage that ‘if it ain’t bust don’t fix it’. There will be a continued focus on the quality of people, training, talent development within the firm – there are a lot of good young people that we want to bring in to act and think like Lockton employees.

“We’ve got time on our side, Mike isn’t going anywhere yet. His rationale for this was that he’d been 10 years in the CEO role and it needed a fresh pair of eyes. I’d always decided this is the sort of thing I wanted to do and Mike is now doing some work with the family office and the family board around the future strategy of the group.”

Unlike many of its UK peers, Lockton does not have a reputation for big and bold market manoeuvres – preferring instead to go about its business in a more discreet manner.

Such an approach is not likely to change under Nimmo’s leadership, yet he has not ruled out making niche acquisitions – either in the UK or overseas – and he is positively buoyant about the prospect of extending specialisms, bolstering the firm’s international presence beyond the current 65 offices in 17 countries, and bringing in top talent from rival companies.

He says: “We want to expand in our speciality space and continue to be world-class in all of our specialities. We want to continue to focus on key industry niches where we’re very strong.

“In terms of geography there will be more Asian build out but it will be selective, there will be more selective activity in the Middle East, we’re also interested in Europe.

“This is also a target-rich environment at the moment; there are a lot of people in various high-quality firms who are interested in going a different way.”


Over the coming years, high on the agenda for Nimmo will be selective “investment, nurturing and repositioning” of certain parts of the business, such as marine and aviation.

When asked what he would class as his key challenge upon assuming the Lockton UK and international hotseat in May, Nimmo explains: “There is a lot to do. There are parts of this business that are very fixed and we’re extremely happy with their pace and performance in the market, but there are other parts of the business that need more investment, more nurturing and we’re looking to reposition them quite dramatically over the next two to three years.

“Those will be the areas that have suffered the most at the hands of the market, such as aviation. The issue there is rates – it’s oversupplied by 260% in capacity, rates down to one-third of what they used to be three to four years ago, and there shows little slowing in the decline. The losses of late have all been in the war and terror market, not main hull losses.”

On how he intends improve Lockton’s fortune’s within the aviation market without the significant monetary investment witnessed elsewhere in the broking sector, Nimmo adds: “You can do the JLT thing and buy everyone in the market and do the whole Field of Dreams thing – build it and they will come – which is a huge investment. We’re a private company so the partners invest – everyone literally takes money out of their pocket to invest meaning it is very cautious and we don’t leap into anything without thinking about it a lot.

“When you look at the aviation market, what you want to do is buy one or two really good hires, settle your business down, make sure it’s operationally efficient, start to get some organic growth back into the business, rather than just acquisition after acquisition. You’re very well positioned then, that should there be a change in the market you can capitalise on it. But putting in tens of millions of pounds of investment at this stage in the cycle strikes me as bold – and we’re fairly risk adverse.”

When quizzed on what other areas of the Lockton business will feature on his hit list, Nimmo replies: “Marine. We like the marine business. It’s a good steady market and there are portions of the market that are fantastically stable, like protection & indemnity, which is a portion of the market that we really like.

“We will be investing in that space over the next few months – at the moment we are 300% to 400% underweight in marine, globally we should be a lot bigger than we are.”

While the recruitment of fresh talent and the bolstering of Lockton’s global footprint – Nimmo has told Post the company intends to expand into three new Middle Eastern territories and is considering entering New Zealand and further afield in Africa – remain a prominent focus, equal attention must be paid to the broker’s bread and butter offering.

He explains: “We are a speciality mid-market and upper mid-market broker and in certain classes, where we are in global speciality, I’d say we’re absolutely top 5%. So, in [financial and professional liability] lines, such as professional service firms, financial institutions, directors’ & officers and errors & ommissions, we are world-class – we go up against Willis, Aon and Marsh and win.

“We have 30 of the top 100 law firms in the UK and that’s a market area where we continue to move quickly. There’s a phrase in our company and that is ‘our strategy is not to have a strategy’ because opportunity drives strategy so it’s best to be nimble and not get fixed on a single point on the horizon.”

The past two years have been awash with merger activity in the broking sector – with further deals predicted to be completed in 2016 – yet Nimmo is not prepared to steer the Lockton ship into heavy acquisitive waters anytime soon and will instead continue to concentrate on what he believes sets his company apart from its competitors.

Complicated M&A deals
Having coming through the merger of his former firm Johnson and Higgins into Marsh in 1997, Nimmo is well versed in the complicated and potentially disruptive influence M&A deals can bring.

He says: “We had an interesting period for about 18 months in the merging of the J&H and Marsh cultures – that was an interesting thing to watch and experience.
“[Lockton] doesn’t get the same indigestion [compared to other brokers making acquisitions] and if we follow what we’re trying to achieve in terms of how we try to relate to clients – we have a strapline ‘broking done differently’ – then it seems to give us double digit growth.

“We want to keep our management layout incredibly thin and highly engaged in the business. We’re not looking at building a big infrastructure of management because we’re privately held and we reinvest a lot of our money back into our clients and purchasing good people.”

On why he believes Lockton to be a unique broking proposition, he adds: “The relationship we build, the intimacy we build and the absolute focus on delivering on our promises is a real passion for us. People really think about it and it is not something that gets handed off to a broking unit because in this firm the partner that holds a client relationship can’t hand it off.

“Our guys are individually rewarded on the performance of their clients’ businesses so they need to look after them and they’re very motivated to look after them and ensure that their business stays with the firm and that their client is happy. It’s why our client retention rates are up at 97%.”

It is this overriding emphasis on the consistency of high-level client service that Nimmo hopes will continue to underpin his tenure at the top.

Having shared a common industry grounding with Lockton’s other executive chairmen – Hammond, Chris Brown, Paul Jack, and Julian James – the former Sedgwick Group graduate trainee encountered a career crossroads having moved into the Marsh hierarchy following the J&H deal.

Despite being offered the Fin Pro CEO role at Marsh, a protracted discussion with his wife led him to joining forces with the aforementioned management team at what was then an international broking start up.

He explains: “I went home to my wife and said I’d been given this fantastic approach to join Lockton and I’ve got this promotion to become CEO of Fin Pro – so it wasn’t the worst place in the world to be.

“I wrestled with this for weeks. Marsh had been incredibly good to me, I had a great time at Marsh and haven’t got a bad word to say about the company – but doing a new global broking start-up was a very intriguing prospect. The only time I had done one of those before was at J&H and I loved J&H. I loved the private side of the business and how close the partners were to the clients.

“The decision was made when my wife got so bored of me talking about what to do she said ‘what’s the decision you’re going to regret most?’ That absolutely crystallised everything for me, so I took the job at Lockton.”

Fast-forward a decade and all bar one of the original equity partners remain at Lockton – Julian James stepped down in 2013 to take over at Allied World Assurance Company’s European platform.

For his part, Nimmo is proud to share a legacy of stability that continues to serve as the hallmark of success at Lockton.

He concludes: “It’s all part of the continuity and retention piece around staff and consistency of management that we’re very focused on. I doubt there’s a management team in London that looks the same after 10 years, which means we’re either dull and loyal or something really good is going on.”