CFC gets ILS & pension fund backing for Syndicate 1988 launch

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Specialist cyber focused underwriter CFC has announced that backing for its newly launched Lloyd’s Syndicate 1988 includes an insurance-linked securities (ILS) fund, a large pension fund, and also reinsurance firms based in Bermuda, Cayman and Japan.

cfc-underwriting-logoIt’s a vote of confidence for CFC’s cyber underwriting, with the company acknowledged as one of the specialists in the cyber insurance market.

CFC’s Syndicate 1988 at Lloyd’s is managed by managed by Asta Managing Agency Ltd. and was targeted a July 1st underwriting start.

The company has hit that target and announced this morning that CFC Syndicate 1988 is underwriting roughly 20% of CFC’s established portfolio, which will generate around £100 million in gross premium.

The syndicate will write a mix of CFC’s established portfolio of specialist, emerging and digital economy risks, so cyber focused.

CFC believes that emerging and digital economy risks provide an area of high structural growth, and are diversifying classes for the Lloyd’s market, as well as third-party capital providers.

The syndicate has now begin trading and CFC said it had worked with Aon Capital Advisory to attract “heavyweight third-party capital support”, which includes an ILS fund manager, a large pension fund, and the reinsurance backers.

CFC said that with the launch of Syndicate 1988 it has become “one of the first independent MGAs of scale to establish a Lloyd’s syndicate and the first MGA-to-syndicate business to secure risk capital from a pension fund.”

The syndicate was set up and all of its capital raised in less than six months, CFC noted, adding that the entire process was conducted virtually.

Syndicate 1988 is designed to “be futuristic”, CFC said and it won’t have a box at Lloyd’s.

Instead, it will use technology and be operated with a lower level of resources than traditional syndicates at Lloyd’s, while Matt Taylor, of CFC, will be its Active Underwriter.

With ILS fund, pension fund and reinsurance capital backing, as well as a more efficient and technology-led business model, while underwriting a diversifying class of business, Syndicate 1988 ticks a lot of boxes for the Lloyd’s strategy right now.

It shows how efficient third-party capital can be brought into the market, while also demonstrating that in this increasingly virtual world a physical presence in the Lloyd’s market is not required.

While the name of the ILS fund manager backing Syndicate 1988 has not been disclosed, there are likely only a handful that it could be, as cyber and digital risks are not widely written in the ILS market as yet.

Of those writing some cyber risks, Hudson Structured Capital Management and ILS Capital Management would be more obvious candidates, while Nephila Capital has also been exploring this area of the reinsurance business.

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