In September 1996, Lloyd’s of London implemented its Reconstruction and Renewal plan (R&R) – a complex market restructuring - under which Lloyd's sought to put an end to market wide litigation. The idea was to "draw a line" under prior year losses by reinsuring the 1992 and prior year business underwritten by its members (or names) into Equitas, a UK authorised reinsurer. At the time of R&R, many insurers believed that the writing was on the wall for the market.
Prior to that, expectations had been low when Lloyd’s tasked a small team of experts including Russell Group CEO, Suki Basi with the goal of helping the newly formed reinsurance giant model its exposures. Lloyd’s eventually moved into the black and recovered from the crisis. The crisis may have been the re-birth of Lloyd’s, but it was also the birth of Russell Group.
With its place firmly established in the insurance community, Russell Group moved on, building its core risk modelling business platform: ALPS. This platform allows reinsurers to understand and quantify their risk exposures within the insurance, reinsurance and retrocession business trading network, by combining strong industry-leading business intelligence with innovative technology.
Russell Group’s reputation grew as its ALPS solution became an industry benchmark in the Aviation class. Russell Group’s approach was not restricted to the aviation class, but rather applicable to the wider specialty classes. So, it was no surprise when Russell rolled out its platform across Space, Energy, Casualty and now Marine classes.
Over the years, Russell Group has helped underwriters to consistently deliver a superior return on equity. However, this insight into the way reinsurers’ model their exposures was not limited to that market.
For in their dealing with reinsurers and their trading networks, Russell Group quickly identified that there was a growing requirement in the increasingly connected world, for corporates to model and manage risk exposures within their business trading networks too.
So, the question that faced Russell Group, as it embarked on this new area, was what would be best suited to their expertise? The answer was simple: the transportation layer. The transportation layer, which covers everything connected to the transportation of goods and services, from marine and aviation to energy and financial services. If Russell Group could identify and analyse the potential connections within this layer, it would help corporates better understand their risk exposures. By connections, what we really mean is “chasing the money”. If a corporate would like to understand the potential accumulations of risk in their business trading network, surely the best place to start would be looking at the flow of money? Russell Group believes that by following this money, corporates will not only understand their risk blind spots, but also unlock new and previously unknown opportunities.
Within the corporate area, Russell Group is effectively becoming a data bridge linking together corporates with the insurance risk and opportunity value chain. This therefore raises the question, of what is the next area of exploration? We believe this to be the risk exchange. For, in today’s world of new technology and fast-moving events, there is a growing gap for a “dynamic risk platform.”
A platform that helps a corporate cover their risks, an insurer hedge against them and investors to trade risks in and out of their portfolios. This is the future risk exchange: a dynamic and flexible trading platform. A future that Russell will work to shape.
The Russell Group journey, which started with its pivotal role in the Equitas project, has brought us to a point where we are building a greater understanding of how connected risk operates across vertical markets and the wider global economy. “Chasing the money” thinking explores how opportunity and risk flows across the global economy, which enables the deeper business intelligence to exploit opportunities and risks and achieve the superior return on equity for corporate clients and their trading partners. In other words, exploring, understanding and exploiting opportunity and risk in a connected world.