The world’s leading specialist insurance market returns to the debt market
Lloyd's syndicates are set to receive a windfall after the corporation announced it is to return to the debt markets.
The issue of Tier 1 perpetual subordinated debt will give greater flexibility and liquidity to Lloyd’s, further strengthen central assets and reduce the cost of mutuality to Lloyd’s members, according to Lloyd's.
Chief executive Richard Ward said: “Lloyd’s has never been in better shape. In the last year we have reported record profits, been upgraded to A+ by two rating agencies, and seen a line drawn under the past with the deal between Equitas and Berkshire Hathaway. Our return to the debt markets is testament to this strength.
“One of the key advantages of the Lloyd’s platform is our mutual structure that enables businesses to generate superior returns. This issue will further strengthen the capital advantages of Lloyd’s, enhancing the return our members can achieve.”
The size and terms of the transaction will be finalised following an investor roadshow to UK investors, and will be subject to market conditions. An application will be made to list the debt on the London Stock Exchange.
The debt is expected to be rated A- (Stable Outlook) by Standard & Poor’s and Fitch, and bbb (Positive Outlook) by A.M. Best. Lloyd’s has appointed Citi and HSBC as joint book-runners for the transaction.
This is the second time that Lloyd’s has raised subordinated debt, having previously raised approximately £500m of lower Tier 2 debt in 2004.
