Thank you for visiting Alpha. You have now logged out.

To access the Alpha Private Client Area please login above with your username and password.

If you wish to register with us please contact:

Alpha Insurance Analysts Ltd, 107 Fenchurch Street London EC3M 5JF

T: 020 7767 3420 E: info@aianalysts.com

Login Required

The Market News articles are for registered members only. Please input your email and provided password within the client login box at the top right of this page to view our articles in full.

Alternatively you can register for access to our Market News from HERE.

Forgotten Passwords

If you have forgotten your password please click HERE

or contact us below:

Tel: 020 7767 3433
Fax: 020 7022 8781
Email: info@aianalysts.com

Thank you!
Alpha Insurance Analysts Ltd


Notice: Undefined index: client_login_id in /var/www/vhosts/aianalysts.com/httpdocs/wp-content/themes/rttheme18/header-design2.php on line 58

Welcome
Notice: Undefined variable: user_data in /var/www/vhosts/aianalysts.com/httpdocs/wp-content/themes/rttheme18/header-design2.php on line 76

Notice: Trying to get property of non-object in /var/www/vhosts/aianalysts.com/httpdocs/wp-content/themes/rttheme18/header-design2.php on line 76
to the Alpha Private Client Area.

Click on the Private Client Area icon to view information relating to your personal underwriting through Alpha.

Visit Market News to read Alpha’s commentary on events and listen to audio files of Alpha meetings and other events on Diary Dates.

Investing in Lloyd’s

Lloyd's offers a unique investment that can produce high returns

Underwriting at Lloyd's involves a significant degree of risk

There is a risk of capital loss as well as underwriting loss

Membership of Lloyd’s is not suitable for all

Independent financial advice should be sought

The Lloyd’s Market

Lloyd’s is not an insurance company, but the world’s leading specialist insurance market. It comprises different managing agents that operate a total of 84 syndicates and 15 Special Purpose Arrangements. Investors in the market provide capital for these syndicates. At the start of 2020, there were 20 full tenancy syndicates and 12 Limited Tenancy Syndicates (including Special Purpose Arrangements) open to third-party capital. More syndicates will access third-party capital in the future. Each syndicate has different areas of expertise and transacts a wide variety of insurance business on behalf of its capital providers. Every investor chooses those syndicates upon which they wish to participate.

For 2020, the Lloyd’s market is likely to underwrite gross premium income of approximately £25bn (net of acquisition costs) which makes it one of the larger insurance providers in the world.

Capital providers receive a share of the profits or losses that accrue from the underwriting business of these syndicates in proportion to their commitment. Lloyd’s has a sought after network of overseas business licences that gives syndicates direct access to virtually all overseas markets.

For over 300 years, Lloyd’s has never failed to pay a valid insurance claim. This has been achieved by building a Central Fund of pooled reserves which stand as a guarantee behind each of the syndicates. Thanks to Lloyd’s unique capital structure, it has the following credit ratings: A.M. Best ‘A’ (Excellent), Standard and Poor’s ‘A+’ (Strong) and Fitch ‘AA-‘ (Very Strong).

The Lloyd’s Performance Management Directorate (PMD)

The PMD was set-up in 2003 to ensure that the Corporation of Lloyd’s undertook an active commercial role in managing market performance. To participate within the market, syndicates are given a licence to trade by the PMD, which is reviewed annually.

The principal purposes of the PMD are:

  • to protect the Central Guarantee Fund;

  • to monitor and improve the long-term performance of Lloyd’s syndicates; and

  • to raise standards across the Lloyd’s market.

As such, its responsibilities include:

  • reviewing, challenging and approving business plans;

  • setting guidelines for the levels of risk taken;

  • ensuring a competent standard of underwriting across all syndicates in the market;  and

  • improving the performance of the bottom quartile syndicates.

The Advantages

The main benefits of Lloyd’s membership now include:

  • diversification in to a broadly uncorrelated asset class;

  • the potential for both underwriting profits and capital gains;

  • double use of assets;

  • limited liability;

  • potential tax planning benefits for UK residents; and

  • leveraged returns.

The Risks

Prospective investors should note that underwriting at Lloyd’s involves a significant degree of risk and those investing in the market will be exposed to the risk of underwriting losses, both from current underwriting and from exposure to prior years. In the event that claims reserves prove inadequate, investors remain liable for losses until the liability of all syndicates participated upon have been closed by means of reinsurance. Even then, in the event of failure of the reinsurance contract, the ultimate liability remains with the investor.  For limited liability investors, the liability is limited to the total Funds at Lloyd’s, the value of syndicate capacity, funds held in the Limited Liability Vehicle (LLV) and pipeline profits.

The capital value of syndicate capacity can go up and down and so there is a risk of mark-to-market capital losses as well as underwriting losses.

Videos and Glossary

Lloyd’s has produced the following educational videos which you may find useful as an introduction to the Lloyd’s market.

How the Lloyd’s Market Works

Lloyd’s Extraordinary History

Understanding Lloyd’s | The Lloyd’s Market

Understanding Lloyd’s | Lloyd’s Brokers

Understanding Lloyd’s | Lloyd’s Underwriters

Understanding Lloyd’s | The Corporation

Like most trades, the insurance industry – and the Lloyd’s market in particular – uses its own jargon and acronyms.  You may therefore find Lloyd’s Glossary to be of use on occasion.