In a deal believed to be the first of its kind, brokers and intermediaries are being invited to invest in a new Lloyd's syndicate and own a share of its managing agency.
The aim is to allow broking members – and any others who also choose to invest in the new syndicate – a direct slice of the profits generated by the managing agency through its fees and commissions.
This way, they participate in both the profit of the managing agent as well as the syndicate – a benefit whose value many disgruntled Names of the late 1980s would see clearly.
The ground-breaking arrangement has been structured by Edgar Hamilton & Wellard in conjunction with a group of senior insurers headed by Andrew Laing, managing director of Lombard Insurance until last October.
The new syndicate is called Heritage Underwriting Agency, and has been approved by Lloyd's to write as Syndicate 1245 for the 2000 year of account.
It aims to be a market leader of speciality casualty and property business, as well as writing a broad-based book of business to achieve spread.
At present, the UK is intended to provide less than four per cent of Heritage's business – with the USA providing nearly 70%.
However, as British brokers become more involved, this may change. Its allocated capacity for 2000 will be £50 million, rising to £72m by 2004. It aims to achieve an underwriting return of 4.35% in its first year, and 5.8% by 2002.
Syndicate 1245 will be managed by Heritage's wholly-owned subsidiary, Heritage Managing Agency. Lead underwriter will be Justin Tweedie, who became an active underwriter in 1996. He will draw down an annual salary of £130,000.
As well as Laing, its non-executive chairman, Heritage's directors are managing director Martin Gray, a director of Hampden; finance director James Brandon, formerly of RF Bailey; and non-executive Nigel Hanbury, a director of Hampden and Nomina, which is a promoter of a Lloyd's conversion scheme, as well as member of the Council of Lloyd's.
Heritage's chairman Laing has been drumming up support from Members' Agents Pooling Arrangement Names and other investors. And in a separate marketing initiative, Edgar Hamilton Wellard's managing director Kevin Spencer has written to 40 brokers and intermediaries inviting them to invest in a new corporate member of Lloyd's ("Newco"), through which they may invest indirectly in Heritage at a ratio of 10:1.
This means that a broker wishing to invest £10,000 in Heritage shares would be required to provide £100,000 of capacity to the syndicate.
Sources close to Heritage suggest broker response has been strong. The offer closes on October 22.