2018 Review: a message from the Executive Chairman
2018 was another successful year for Lombard International despite the difficult geopolitical and macro-economic environment across the globe. The resilient performance of our business stands us in good stead to embrace the opportunities that lie ahead in 2019. Our success is thanks to the strength and commitment of our global team, and the trust and support of our partners and clients around the world.
Over the last 12 months, we further expanded our worldwide operations, building a truly unique business, enabling an integrated global perspective to best serve our clients and their advisors, no matter where they reside. This global reach enables us to leverage our expertise and benefit from the tailwinds in certain markets while managing headwinds in others, as we continue to build Lombard International for the long term.
We understand the concerns that our clients and partners feel in the face of growing geopolitical uncertainty. We recognize how these issues impact financial futures. It is during such uncertain and challenging times that the solutions and services we provide become even more critical. We help our clients and their advisors navigate challenging market conditions, to help ensure their wealth is protected, portable and can be passed on to future generations in a sustainable manner.
A globally connected future
Our client base and their global reach continues to grow. The Wealth-X 2019 High Net Worth Handbook estimates that by 2023 the number of High Net Worth individuals (“HNWI’s”) will exceed 30.1 million – an increase of 7.7 million from 2018. Of these HNWI’s, we know from the 2018 Knight Frank Wealth Report that 34% already have a second passport or dual nationality and another 29% are considering it. In addition 21% are considering permanently emigrating to another country.
At Lombard International we believe in the power of global connectivity. We believe that we will continue to see more and more individuals living and working as global citizens. Our global team of over 500 employees and over 60 technical experts working across Asia, Europe, Latin America and the United States provide the expertise and capacity to support these individuals and create solutions from multiple jurisdictions, no matter how complex.
Equally, we do not underestimate the importance of retaining local insight and expertise. Our team is made up of over 40 different nationalities speaking over 30 languages, which means we have the local knowledge to engage with our clients and partners in their native tongue, with an understanding of regional cultures, regulations and requirements.
An integrated global vision supported by deep local expertise differentiates Lombard International and its ability to truly engage with our clients and their advisors on a global basis.
2018 highlights and new developments
We are proud to share a number of highlights for 2018:
- In Europe, we completed the acquisition of a portfolio of life assurance policies from HSBC Life Assurance (Malta) Limited.We have also made good progress in further strengthening our distribution reach, particularly in the Family Office channel by forging a strategic partnership with Stonehage Fleming, one of the leading independently-owned global family offices and the largest in Europe Middle East and Asia.
- The US business has continued its organic growth strategy focused on the significant scaling up of its institutional business, including building out and actively marketing its investment options platform.
- In Asia, we secured excellent early stage opportunities, and are seeing great interest across the region.
Among our accomplishments last year, we were delighted that all Lombard International insurance entities, including Europe, US and Bermuda received A- (Excellent) ratings from AM Best. These ratings reflect our balance sheet strength and confirm the leadership positions we hold in the US and Europe.
Innovation will be a driving force that enables us to sustain our market leading position, continue to evolve and offer our clients and partners best-in-class solutions.
The ability to thrive in a changing world is predicated on a company’s recognition that markets are dynamic, client preferences are ever-changing, and companies must regularly adapt and evolve to remain competitive. To this end, we are proud to announce the launch of the Lombard International Idea Lab. This initiative is designed to enhance the intellectual capital and culture of innovation within our business and set us apart from our peers.
The Idea Lab is an incubator for strategies to drive growth globally across our business. There are two primary objectives. First, we believe that the Idea lab will support a culture of innovation that encourages the cross fertilization of ideas across our organization. Second, it will organize, manage and sponsor new growth opportunities, such as new products, new markets and new potential clients.
The concept of the Idea Lab formalizes some processes that we have successfully developed in the past. In fact, we have already launched several initiatives with the kind of global support that the Idea Lab was designed to offer. For example:
- The International Life Plan has its roots in Bermuda and Asia. It was brought to Europe to support further diversification and competitive differentiation.
- The Wealth Passport was developed through close and regular collaboration between European and US colleagues.
The power of Lombard International relies on the intellectual capital held by our experienced and focused team across the globe. The Idea Lab will enable even better collaboration and creativity.
I cannot stress strongly enough that it is our people that power our success. In 2018 we have strengthened the composition of our Global Board through the following appointments:
- Norbert Becker has been appointed non-executive Chairman of the Group. Norbert has been a member of our Board since 2009 and is a seasoned financial services executive with significant experience. We value the wisdom and insight that he brings to our business.
- Brendan Boyle joins our Board, and brings more than 40 years of experience in the financial services industry. Brendan was previously a senior Managing Director at Blackstone where he founded the firm’s global Private Wealth business. He also held senior management positions at Smith Barney, Prudential and UBS/Paine Webber.
- Sharon Ludlow joins our Board, and brings more than 25 years of experience in the financial services industry to the position. Sharon’s career highlights include playing a key role in Canada Life Financial and launching Kanetix, Canada’s first online insurance marketplace.
In 2018, we continued to strengthen our senior management with both internal promotions and external appointments. These individuals, together with the leadership teams in each of our major centers help to drive our business on a global scale.
- Florent Albert has been appointed Global Chief Financial Officer. He takes responsibility for overseeing the performance of all financial activities of the Group.
- Monica Risam has been appointed Global General Counsel, with responsibility for the Legal, Regulatory Affairs, Company Secretarial and Compliance teams across the business.
- Kent Keim has been appointed Chief Financial Officer of the US business having held senior operational and financial positions in Lombard International over the last 25 years.
- Andreas Meier has been appointed to the new role of Chief Investment Officer, Europe. This role was created to strengthen our focus on the opportunities associated with the broad investment platform that we feature in our solutions.
- Enrique Barroso has taken responsibility for driving Latin America new business opportunities through our Luxembourg carrier, in addition to his role as market leader for Spain and Portugal. His appointment enables Lombard International to leverage cross border capability between both regions.
- Shaun Chang has been appointed as Sales Director and Deputy CEO, Asia. He will work in close partnership with Tammy Lu Tsui, CEO of Lombard International Asia, providing strong leadership across the Hong Kong and Singapore offices.
2018 Financial Performance
We continue to enjoy the benefits of a sustainable business model underpinned by recurring fee-driven business, stable asset base, minimal balance sheet exposure and limited retained exposure to mortality risk. In 2018 we delivered a resilient performance:
- New Business Premium was strong at €5.1 billion, in line with our record 2017 performance, achieved against the backdrop of significant geopolitical and economic uncertainty.
- Assets under Administration grew to €41.5 billion* despite the headwinds from global markets and investment performance.
The start of 2019 has been overshadowed by ongoing geopolitical concerns including the challenging Brexit negotiations between the UK and the European Union. While we manage our business with appropriate caution during these turbulent times, we also view this as an excellent opportunity to fulfill our purpose.
In 2018, we undertook a project to define and articulate our ‘raison d’être’. We are the pioneers of our industry, and in order to sustain our leadership position, we know we must lead with purpose. Our purpose is to protect and preserve the wealth and assets of our clients so that they may serve their families, their institutions and their communities now and in the future. Our purpose is to make legacy count.
This purpose gives us focus. It enables us to weather the storms of uncertain global markets. It gives our clients and partners certainty in a changing world. Our objective remains to build a global business that continues to provide exceptional solutions for our clients’ unique and complex situations.
None of this can be achieved without our talented people, and the continued trust placed in us by our partners and clients, so I would like to take this opportunity to thank you all.
I’m confident that together we will continue our growing momentum and that 2019 will be another rewarding and exciting year for all.
John K. Hillman
* as of 31 December 2018.