Verto Syndicate 2689 aims to ease private capital access to Lloyd’s

Verto Syndicate 2689, a newly approved “in principle” Lloyd’s of London syndicate, aims to ease access to the returns of Lloyd’s underwriting business for private capital investors through proportional quota share reinsurance of other syndicates.

Private capital consists of high-net worth, family office and some institutional investors and has been accessing the Lloyd’s of London insurance and reinsurance market for years, but according to managing agent Asta Verto Quota Share Syndicate 2689 will offer a “more flexible and commercial way” for private capital to participate than has been available before.

As well as promising a flexible and commercial way for third-party capital to access a Lloyd’s syndicate, being a quota share or proportional reinsurance player Verto Syndicate 2689 will also enable investors to benefit from a diverse spread of the Lloyd’s underwriting market as it scales up.

Asta said today that it has received in principle approval for Verto Quota Share Syndicate 2689 from the Lloyd’s Franchise Board. Verto Syndicate 2689 will aim to begin business on 1st January 2017, underwriting “proportional reinsurance of Lloyd’s syndicates and related parties.”

Verto Syndicate 2689 will be 100% capitalised by private and institutional investors, under the advice of Hampden Agencies. The syndicate aims to “operate via an innovative structure that allows private capital a more flexible and commercial way to participate at Lloyd’s than has been previously available.”

Asta CEO Julian Tighe commented on the announcement; “It is a privilege to be working with Hampden Capital on this pioneering syndicate that marks a real step change in the way private capital is able to access the market. Asta’s track record of launching underwriting businesses, combined with our expertise and best practice approach, means Verto Syndicate 2689 and its private investors will have all the necessary support and management needed to succeed.”

Hampden Agencies CEO, Neil Smith added; “Verto Syndicate 2689 is an important strategic initiative by Hampden to broaden access to underwriting opportunities for Hampden’s clients. The new syndicate transforms the provision of private capital by expanding the range of options to include the Verto syndicate which will underwrite a diversified portfolio of proportional reinsurance contracts. We believe that Syndicate 2689 is a natural evolution of how Hampden supplies capital to the Lloyd’s market and will be attractive to syndicates not previously supported by private capital.”

Verto seems to be aiming to provide almost a spread of the Lloyd’s market, by entering into quota share reinsurance arrangements with other syndicates and members. In that way investors in Verto Syndicate 2689 will be able to access a diversified book of Lloyd’s business, safe in the knowledge that they are only taking a proportional share of the underwritten risks and that the original underwriters still have alignment.

In this way Verto Syndicate 2689 will perhaps act a little like a Lloyd’s of London reinsurance sidecar, but of course not fully collateralised as we see in the ILS market today and able to benefit from the structure of Lloyd’s and leverage provided by the central fund.

The syndicate will have Peter Mills, previously head of Global Specialty Reinsurance & EMEA P&C for Endurance Re in Switzerland, as active underwriter. Prior to that Mills held senior roles at in reinsurance at firms including Tokio Millennium Re, Cologne Re and XL.

Following on from the ILS market’s growth it has been recognised that the way third-party capital accesses Lloyd’s has often been cumbersome and inflexible. With opportunities for private capital to access insurance-linked returns now available across the globe, from ILS fund managers and structures, modernisation of the structures that enable access to Lloyd’s has been required for some time.

Asta and Hampden are both involved in innovative syndicate start-ups within the Lloyd’s market and it’s encouraging to see them trying to offer third-party capital investors more efficient ways to participate in the returns of Lloyd’s underwriting and a broader spread of the market than backing a single syndicate alone.

Join Artemis in New York on February 3rd 2017 for ILS NYC