New syndicate ready to be formed

Lloyd's is looking at forming a syndicate to deal with the closure of its run-off businesses.

Industry insiders say that fewer syndicates are entering the reinsurance-to-close market, forcing Lloyd's to seek help from independent investors.

A potential investor said: "Reinsurance-to-close is a big problem that is not going to go away.

"We, along with other businesses, have expressed an interest in terms of providing capital for this syndicate."

It is understood that Lloyd's is expecting to raise around £50m to fund the syndicate and that it will look to reinsure it outside of Lloyd's with the likes of Swiss Re.

Sources close to the industry said that run-off specialist Cavell is being considered to manage the new Lloyd's run-off syndicate.

Cavell is currently responsible for managing the run-off of Goshawk's Syndicate 102.

But sources said the syndicate will only deal with a handful of run-offs, such as Cox 1208 and 1176, Talbot 376 and GoshawK 102.

A source said: "The syndicate will not be used as a wholesale closure of all run-off businesses."

But experts warn that Lloyd's will have to make the investment as open and attractive as possible to succeed.

Capita London Market Services sales and marketing manager Mike Burrows said: "There is a growing market for reinsurance-to-close, which the likes of Liberty, Imagine Underwriting and people outside of Lloyd's would be interested in.

"But the question is whether the price will be right for Lloyd's."

A Lloyd's spokeswoman said that they are considering various options but could not give any specific details of future plans.