Worldwide recruitment spree brings significant rise in third party capital
Third party capital being injected into Lloyd's from oversees investors is set to rise significantly, leading Lloyd's players have predicted.
The increase in third party capital follows a recent worldwide recruitment spree by members' agents.
Hampden Private Capital has reportedly increased its membership by between 20 and 30 people, which is expected to translate into £1.9bn of investment from the agency next year.
Edward Vale, consultant for the Association of Lloyd's Members (ALM), said: "We expect third party capital to be up in 2007 and for the next couple of years, if rates stay as they are."
Vale said the main driver behind the increase was the recent approval of limited liability partnerships (LLPs), which offers reduced personal responsibility for business debts.
"This summer was the first time that members' agent could market Lloyd's on the back of LLPs," he said. "The marketing exercise that they have both been undertaking is not the sort that will produce results in the next couple of weeks, but is likely to create significant numbers in the next couple of years."
But a number of Lloyd's managing agents are trying to buy out third party capacity. Hardy said last week that the Council of Lloyd's had approved its application to make a minority buy-out of the third party capacity currently remaining on its Syndicate 382.
Hardy joins the likes of Advent, Wellington, Hiscox and Beazley, who have all recently attempted to buy-out Names.
Wellington failed to gain "greater control" of its syndicate earlier this year, in a deal that reportedly would have cost the insurer £50m.
But the managing agent said in its recent half year results that it still intended to increase ownership of its Syndicate 2020 "provided the terms meet our economic objectives".
Similarly, Kiln has also indicated that it will pursue opportunities to increase the proportion of ownership of its underwriting capacity .