Lloyd's brief dabble in the captive insurance market appears to be over, following its decision not to pursue any new business in the area, writes Claire Veares.

The insurance giant's only captive, formed by Smithkline Beecham in 1998, recently went into run-off when the company merged with Glaxo Wellcome.

Lloyd's commercial director Roger Sellek said it had decided not to seek captive business as part of a root and branch review Lloyd's was carrying out with consultants from Bain & Co. He said captives, which tend to have tax considerations as their main aim, may not be as focused on profitable underwriting as the rest of the Lloyd's Market.

Paul Bawcutt, chairman of Risk and Insurance Research Group (RIRG) said setting up a captive at Lloyd's would be an option for about only 20 or 30 very large companies.

“The cost of operating in Lloyd's is pretty high – you need to be a fairly substantial operation.”

He said because of this, Lloyd's had been marketed as a “platinum card location” for captive insurance companies.

But he added that he thought Lloyd's could have attracted five to ten captives by now and that it needed marketing to the right people.

Captive insurance companies are set up to self-insure a company. They are usually based in places that offer favourable tax rates and regulations such as Bermuda, Ireland and Guernsey.