Argenta Private Capital Limited, a subsidiary of Argenta Holdings plc also the parent to Argenta Syndicate Management Limited which manages aggregate underwriting capacity of £310 million, has launched a new vehicle called VisionRe Limited to offer high-net worth and institutional investors access to the Lloyd’s insurance and reinsurance market.
VisionRe will take money from investors to be deployed as capital to insurance and reinsurance businesses trading at the Lloyd’s of London specialist insurance and reinsurance marketplace. VisionRe aims to simplify access to the Lloyd’s market for investors, offer a high yield potential, give its investors a dual income from underwriting income and investment returns while offering the same low correlation to other asset classes that other insurance-linked investments, such as ILS and catastrophe bonds, offer.
VisionRe will target an annual return on capital invested of over 10% by investing across a range of Lloyd’s businesses (syndicates). This will also give a very diverse portfolio, perhaps more so than some other insurance or reinsurance-linked assets can offer given the size and scope of the Lloyd’s market.
VisionRe is a Guernsey based company established to offer investors access to the returns of insurance and reinsurance underwriting business at Lloyd’s. Argenta recommends a minimum commitment to the investment of five years and has a minimum investment level of £100,000. VisionRe has an entry fee of 2%, an annual management fee of 1.5% and an underwriting performance fee of 15% of underwriting return above a minimum 7.5% return on assets under management.
Investors will participate in the Lloyd’s market through the performance of the syndicates their capital is allocated to and also as the capital used as collateral to support underwriting will also be invested, giving a second income stream.
Argenta says that over the last 10 years Lloyd’s performance has beaten the FTSE 100 by an average of 10% per annum. At the same time Argenta itself has seen its investors achieve a 21% annualised return. Argenta has established VisionRe as a direct answer to Lloyd’s Vision 2025 demand for more flexible capital from private investors in the underwriting market.
Graham White, Chairman of VisionRe, said; ”VisionRe provides a new opportunity for sophisticated investors to participate in Lloyd’s, which as demonstrated by the recent £2.77billion profit for 2012, continues to deliver attractive returns even when market conditions are challenging. Argenta’s extensive experience of Lloyd’s has allowed it to outperform the market and deliver impressive returns for its investors. VisionRe’s innovative structure builds on that work and offers an efficient way for investors to access the uncorrelated returns available from Lloyd’s.”
Lloyd’s offers an interesting investment opportunity to those investors who are happy to lock their capital up for a little longer than is required in some other insurance and reinsurance-linked investments. For those already allocating capital into the catastrophe reinsurance market, an allocation to Lloyd’s could prove a useful diversifier across more classes of business. To profit at Lloyd’s it is considered best to invest right through the underwriting cycles over a number of years, in which case it offers a very diverse way to access the returns of the insurance and reinsurance market.
We expect more Lloyd’s focused investment vehicles will emerge as reinsurance as an asset class gains in popularity.