Lloyd’s insurer Atrium began life in 1984 and in the time since has built a reputation as a high-quality underwriting outfit, albeit perhaps a little high-minded and self-satisfied at times.
But after last week’s record £1mn Lloyd’s fine, it will take months if not years for Atrium to distance itself from the reputational damage of tolerating a culture which included bullying, a “boys’ club” mentality and an apparent failure to investigate complaints properly.
These revelations – combined with the eye-watering scale of the fine – would be sufficient to make last week the worst in the company’s near 40-year history. But on top of the costly Lloyd’s censure last week came greater insight into Atrium Syndicate 609’s exposures to the unfolding Russia-Ukraine crisis. The worst-case scenarios make for gloomy contemplation.
This is because as a specialist hull war underwriter, Atrium is facing potentially mammoth gross exposures from Russia’s confiscation of hundreds of foreign-owned aircraft leased to domestic operators (following the law that was passed a week ago today). For example, Syndicate 609 is understood to be one of the markets on AerCap’s $1.2bn hull war cover with a gross 7.5 percent line. AerCap is the world’s largest leasing company with billions in exposed assets.
As we noted on Friday, the issue of insurers’ exposure to aircraft leasing is complicated and will likely prompt years of legal argument. But the fact remains it is a negative – potentially a catastrophic one – that won’t go away anytime soon for Atrium and other underwriters.
And nor will the regulatory issue. This was demonstrated by an article in the Sunday Telegraph yesterday which included a Lloyd’s “source” suggesting there was more to come following last week’s announcement.
This will be in the form of a Lloyd’s tribunal for the unnamed former Atrium “Employee A”, who is now working elsewhere in the London market. At this point, his identity will be officially revealed but in reality this may occur before then, judging by the febrile interest from some national newspapers and demands from social media commentators to “name and shame”.
In other words, the issue will drag on and Atrium’s name will continue to be associated with past misconduct for some time to come (which goes beyond the actions of one former employee).
It is (belatedly) doing the right thing – certainly in the form of contrition from non-executive chairman Chris Stooke. He took up the post in January 2021, long after the alleged incidents took place.
One wonders how much he was told before he arrived as chair but he will have to decide whether any more actions will need to be taken to improve the management culture at the firm. Either way, Atrium is fortunate to have a reputable chair in place who is untainted by the activities which occurred before his arrival.
Employee A’s new London market employer will also have to decide what action to take now they are more aware of the background to his exit from Atrium. It is a dilemma – if they don’t act and his identity is revealed then the danger is they will be (unfairly) accused of tolerating inappropriate behaviour. On the reverse side, a tribunal has yet to take place regarding Employee A’s behaviour (as opposed to Atrium’s) and it is surely better to act after a decision rather than before.
Ultimately, what the unsavoury affair demonstrates is the Omaha Sage’s aphorism: it doesn’t take long to damage a reputation but it can take a long time to rebuild it…
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