Barbican has launched a new third-party capital backed Special Purpose Syndicate (SPS), which will underwrite a whole account quota share reinsurance contract, of property, specialty, marine, aviation and transport risks, backed by Credit Suisse ILS funds.
The new Lloyd’s of London Special Purpose Syndicate, SPS 6120, has been capitalised will enter into the quota share reinsurance agreement with Barbican Insurance Group’s Syndicate 1955, starting at the 1st January 2015.
SPS 6120 has been fully capitalised with third-party funds managed by Credit Suisse’s ILS team and for its first year the capacity will amount to £40m.
The SPS vehicle will be managed on a day-to-day basis by Barbican Managing Agency Limited and will write business across the Syndicate’s whole account of risk classes, consisting of three underwriting divisions which operate in property, specialty and MAT (marine, aviation and transport) lines.
Commenting on the launch of the new third-party capital backed SPS, David Reeves, group chief executive of Barbican, said; “The establishment of SPS 6120 boosts the ability of Syndicate 1955 to take further advantage of the multiple opportunities for profitable growth that we see across our underwriting divisions. We are very pleased with the level of support which we have received from the funds managed by the Credit Suisse ILS team and look forward to developing this strategic partnership further.”
This SPS shows another way that a Lloyd’s underwriting business can leverage the capital markets to share its underwriting with third-party capital investors, while also giving one of the largest insurance-linked securities (ILS) managers in the market an entry point into Lloyd’s.
It will give the Credit Suisse ILS team access to a new source of risk and we’d expect to see the SPS increase its capital over time.
Of course, the other angle on this is that this brings more third-party ILS capital into the Lloyd’s market to compete directly with syndicate capital, which will keep up the competitive pressures being felt by underwriters across insurance and reinsurance, including at Lloyd’s.