Lloyd's integrated vehicle Advent Capital has tripled its underwriting capacity to £300m following its acquisition of Kingsmead Underwriting Agency and its corporate member Heraldglen.
The agreement brings together Kingsmead's three syndicates, 2 (marine), 506 (non-marine) and 271 (aviation), and Advent's non-marine reinsurance syndicate 780 which specialises in treaty reinsurance, property and casualty. Advent's managing agency is BF Caudle.
Kingsmead and BF Caudle are to operate as separate managing agents until 2001, but may merge thereafter, Advent chief operating officer Keith Thompson indicated.
Their combined underwriting capacity is £300m, (£200m for Kingsmead and £100m for Advent) of which Advent will own 62%.
The deal is due to be finalised in the next six to eight weeks.
Thompson said: "The rationale for the acquisition is to increase the underwriting capacity of the group."
He added that Advent would be reviewing its structure to specialise in certain areas, instead of diversifying across the Lloyd's market.
Thompson was bullish about prospects for the marine and aviation markets, saying trading is becoming more profitable.
John Plant, chief executive of Kingsmead, said: "I have no doubt the spread of business and combined expertise will provide the enlarged group with exciting and profitable opportunities."
As part of the deal, Kingsmead's sole shareholder Fairfax Financial Holdings, a Canadian-based property and casualty insurer, is to make available £110m of credit to Advent. This means Advent will have an additional £142m to support underwriting for the next five years.
In return, Fairfax will acquire a 20% stake in Advent, a private company with 130 shareholders.
Advent was one of the first corporate capital providers at Lloyd's. In 1999 it merged with BF Caudle, managing agent of syndicate 780, to create an Integrated Lloyd's Vehicle.
