This article has originally been published in Realtid a Swedish financial magazine .
Read the original article here
Blackstone-owned insurance company Lombard International Assurance offers wealth management, in Sweden and other markets. Realtid got an interview with the director of the company’s Swedish operations, Mats Rönneskog. “Unlisted companies are highly interesting in the current low-interest environment,” he says.
Lombard International Assurance is a Luxembourg-based insurance company specialised in structured wealth management across borders. It also offers endowment insurance savings products and a platform gathering investment products from banks.
The company was founded by John Stone from the UK, but has been wholly owned by Blackstone, via the Blackstone Tactical Opportunities Fund, since 2014. The insurance company is present in 20+ markets throughout the world, including Sweden.
“It is mostly clients who need a lot of individual attention. It may be a wealthy family, or a group of investors who have a family-like structure – a ‘family office’,” Mats Rönneskog tells Realtid.se.
Mats Rönneskog has been director of the company’s Swedish operations since 2006. He previously worked as a bank lawyer at SEB and headed the bank’s operations in Switzerland and in France. He started at Lombard as country manager for Sweden and is currently director manager for the same market.
“I prefer being out front with clients, and I like developing people and getting a team to work together rather than having 18 individual team members,” he says.
When he arrived at Lombard, the Swedish operation was not so well developed. Today, it is the fifth largest market for new sales, according to Mr Rönneberg.
“Sweden stands out in a positive way, with strong companies and a good economy. Many actors want to be in the Nordic region. A great deal of wealth is also being created in Sweden. We work with a surprisingly small amount of old Swedish money – new high net worth individuals are emerging all the time,” he says.
Clients can set up endowment insurance policies with Lombard IA. But they continue to receive advice and guidance from their own banks and investment advisors. It is only the investment account that is transferred to Lombard IA. The insurance company can also assist in transferring assets abroad.
The company also offers alternative investment products that may not be offered in Sweden, such as funds exposed to unlisted companies, PE funds, ETFs, and hedge solutions. This is because the regulatory framework in Luxembourg allows for more types of investments than the Swedish framework.
”Wealthy people are hungry for alternative investment products, such as unlisted companies, because it is very difficult to get a good return in the current low-interest environment. Stock exchanges have been doing well in recent years, but it is still difficult to find good investments in these circumstances. Will interest rates remain stable, be reduced or increased in coming years? This creates a very uncertain market,” says Mr Rönneskog.
Lombard AI also works with succession planning, used by wealthy people to, for instance, designate their children as beneficiaries – through Lombard IA’s endowment insurance, the children are guaranteed a certain amount if the market takes a downturn.
Mr Rönneskog says that the company also brings cross-border expertise to Sweden. For example, the company assists Swedish clients who are moving abroad to tailor cross-border portfolios.
“If a high net worth individual has a particular structure for their investments in Sweden, this is naturally adapted to the Swedish regulatory framework. But if that person moves to England there are entirely different requirements for the portfolio, and we have solutions for this.”
The number of private banking clients has decreased in recent years, according to Mr Rönneskog. But the volume of invested capital has increased dramatically. People with €20 million or more in assets account for half of the investment capital.
Who are your main competitors?
“Europe’s primary insurance centres are located in Luxembourg, where we operate, and in Liechtenstein, the Isle of Man and Ireland. But in the Swedish market we compete mainly with Ireland, where many Swedish companies have insurance solutions that they cannot get through domestic banks. This provides access to entirely different expertise and more alternative investments.”
But Brexit may be advantageous for Luxembourg, according to Mr Rönneskog. It is already a regional financial centre in the heart of Western Europe, “with the entire EU as a platform,” he states. Although Luxembourg is only 17 in a ranking of worldwide financial centres, it is the world’s second largest fund manager, after the US.
“Forty languages are spoken here, unlike places like Frankfurt and Zurich. Luxembourg also has strong policyholder protection, which became evident during the 2008 financial crisis when many Englishmen rushed into Luxembourg solutions so they wouldn’t lose money when filing for bankruptcy,” he says.
Many people with money in bankrupt Icelandic banks got access to their funds in two years, because they had Icelandic insurance solutions. But those who were insured in Luxembourg got their assets in six weeks, according to Mr Rönneskog.
“Here you find the best investment protection in the world. The supervisory authority is constantly checking your investment account and helps you take it with you if you switch banks. But in Iceland and even in Sweden, you’re not allowed to touch your investment account during the management period following a bankruptcy, for instance.”
He thinks that the attitude in Sweden is very much that “my bank always takes care of me”. But in today’s globalised world, this is a bit naïve, he says.
Like all industries, Lombard IA is going through a digital transformation. The company has let 100 employees go in recent years. The reason: many of its back office processes and much of its administration have been automated. It currently has a workforce of 600 – 500 in Luxembourg and the remainder at the US office in Philadelphia.
Those who are left have specialised expertise in areas such as taxation and succession law. There is a lawyer for every market.
“We’ve undergone a shift from back office towards front office. Today we use a system called Connect, which automates things like documentation and other administration. This can involve everything from producing passport copies to withdrawing funds from your investment account. The system takes care of all of these things, which previously required a workforce of 100 people.”
He thinks that the insurance company of the future will certainly be able to automate most of its business. But this will take time. Wealthy people want personal advisory services.
”This is particularly important in succession planning, where we need to sit down face to face and talk with the beneficiaries – the children and grandchildren. You can’t automate that part.”
He is also a “bit old-fashioned” when it comes to management.
“I don’t think that this type of client will accept automation on all levels. But we can simplify our administration, and this is something we have been doing since Blackstone acquired Lombard in 2014.”
About Mats Rönneskog…
… He was born and raised in Linköping, but moved as a 19 year old to Uppsala to study law, which resulted in a Master of Laws. But Mats Rönneskog, who speaks French fluently, also studied art history at the Sorbonne University in Paris – and at College of Europe in Belgian Bruges. The university mainly educates French speaking civil servants for the EU.
After his studies he worked as a General Counsel at ASG in Stockholm. By the end of the 80s he became the General Counsel of SEB. But Mats Rönneskog wanted to come closer to the clients and quickly transferred to the bank’s commercial operations. He became the country director of SEB in France and subsequently in Switzerland.
“I dreamt of becoming a corporate lawyer, but realised that I wanted to work closer to the business and the client. As a lawyer I was too much in the background. Today I’m more of a business man than a lawyer. It suits my personality better,” says Mats Rönneskog.