Corporate capital's recent dominance at Lloyd's is about to be challenged by the launch of the largest new syndicate in the market's 300- year history.
Managing Agency Partners' £150m capacity syndicate 2791 begins trading on January 1, 2001 and is one of few recent new ventures at Lloyd's to have significant backing (45% ownership) from traditional Names.
The venture is the brainchild of the syndicate's active underwriter David Shipley and his deputy Richard Trubshaw. Both worked at Harvey Bowring non-marine syndicate 362 owned by Amlin, before embarking on the venture last year.
Shipley and Trubshaw have successfully recruited four former Amlin underwriting colleagues – David Roberts, Andrew Westmore and husband and wife Andrew and Sue Groom. Also joining 2791 are underwriters Bill Katesmark from Hiscox and Jane Poland formerly at Alleghany non-marine syndicate 376. Underwriters Aidan Kong and Ben Garston have joined from Wellington.
The syndicate's claims manager is Ian Springett, formerly of Hiscox.
The syndicate's 10 underwriters and corporate partners such as the Southern California Physicians Insurance Exchange and South African bank ABSA are providing the balance (55%) of its capital.
The syndicate will underwrite all types of marine and non-marine business, except aviation, and is aiming for a premium income of £141m in 2001.
Trubshaw justified this forecast by saying his team comprises leaders in their underwriting fields and has a strong reputation in the Lloyd's market which would attract good business.
Shipley said: “Traditional capital providers to Lloyd's are looking forward to the 2001 underwriting account with confidence after out-performing the market average for the last four years.”
Corporate capital has increased its share of Lloyd's £10bn market from 21% five years ago, to 77% in 2000, (including 2.9% owned by NameCos).
But sources in the market believe corporate capital may have peaked.
They claim the current poor performance of many stock market listed Lloyd's insurers is putting off large investors.
The Association of Lloyd's Members has welcomed the launch of syndicate 2791. Its chief executive Anthony Young said: “David Shipley's proposed new syndicate 2791 provides an interesting opportunity for Names, whether they are underwriting with limited or unlimited liability.”
The ALM said that market conditions for all classes of business at Lloyd's is improving and this is encouraging the development of new vehicles for independent non-aligned capital.
Young added: “Some of our members may well see syndicate 2791 as an opportunity to get in on the ground floor with a respected underwriter looking to grow his business.
“Syndicate regeneration is what Lloyd's has always been about and the resulting entrepreneurial culture is one of the principal attractions of Lloyd's to its clients.”
ALM consultant Edmund Bale suggested corporate capital has been reluctant to invest in Lloyd's publicly quoted companies because share prices have generally underperformed on the stock market.
He said: “It has not been so easy for Lloyd's plcs to raise corporate capital because of their deflated share prices – which in some cases have dropped by up to 50%.”
There are currently 3,296 unlimited liability Names at Lloyd's compared to 853 corporate members.
Another 3,500 Names are believed to be in the process of converting from unlimited to limited liability in the form of NameCos or conversion vehicles such as Sedgwick Oakwood Capital that allow them to become shareholders in Lloyd's underwriting companies.
The majority of Names remaining at Lloyd's tend to be the richest and most committed and belong to the best-performing syndicates which escaped the worst losses of the 1980s.