In a further sign that the Lloyd’s of London insurance and reinsurance market is becoming increasingly accepting of alternative capital & insurance-linked securities (ILS), the Credit Suisse ILS team is capitalising a new Syndicate 1856 with £90m of capacity.
Syndicate 1856 will be managed by Barbican Managing Agency Limited, part of Barbican Insurance Group. The Agency has received approval “in principle” from the Lloyd’s Franchise Board to manage a new syndicate at Lloyd’s.
The Syndicate will be fully capitalised with funding sourced from and managed by the Credit Suisse ILS investment management team, with their investors third-party capital being put to work in the Lloyd’s insurance and reinsurance market as a result.
This is now the second Lloyd’s syndicate to be directly capitalised by an ILS player, following Syndicate 2357 which is capitalised by funds under ILS specialist Nephila Capital’s management.
For the first underwriting year, which is expected to begin on or after 1st January 2016, the Barbican Syndicate 1856 will have £90m of stamp capacity for underwriting, all of which is sourced from Credit Suisse’s ILS operations.
The Credit Suisse ILS team has around $6.5 billion of third-party investor ILS assets under management and is one of the largest players in the insurance-linked investment market.
Credit Suisse has been working with Barbican to access some business from the Lloyd’s market already, through a quota share through special purpose syndicate SPS 6120. The launch of a full syndicate cements that relationship and demonstrates the importance of the Lloyd’s market in insurance and reinsurance, as the ILS players seek to gain access to it.
David Reeves, Group CEO of Barbican, commented on the announcement; “Today’s announcement reflects the evolution of our existing relationship with the Credit Suisse ILS team, following the establishment of SPS 6120 in December 2014. At Barbican, we continue to focus on providing an intelligent gateway for capital into the insurance and reinsurance sector, working with sophisticated capital providers with a long-term commitment to Lloyd’s.”
As ILS capital and managers increasingly access Lloyd’s, the market may find it can take advantage of the efficiencies of third-party capital and the ILS business model to help it to adapt to the changing marketplace.
This certainly won’t be the last ILS player to access Lloyd’s with a full syndicate. With Lloyd’s itself looking to develop structures to make it easier for alternative reinsurance capital to enter the market we can expect to see an increasing volume of ILS investor activity in London.