How it works

Ways to invest

All new members of the Lloyd’s market participate on a limited liability basis

In conjunction with Fidentia, Alpha will guide you on the most appropriate underwriting vehicle.

This will be either a limited company (NameCo) or a Limited Liability Partnership (LLP). Both can be purchased or created afresh.

 

NameCo or LLP

The choice of a LLP or a NameCo will depend upon the circumstances of each prospective member.

Key issues that are taken into consideration are:

  • Funding
  • Flexibility
  • Future ambitions
  • Tax

Broadly speaking, a LLP retains a separate legal identity from its partners (the individuals or companies) but is subject to personal taxation. A NameCo is subject to standard corporation tax.

Whether overseas investors choose NameCo or LLP, they must do so via a UK-domiciled vehicle.

Establish a new vehicle

This method of joining Lloyd’s allows a member to select the size and constitution of the underwriting portfolio in accordance with their risk appetite. In addition, there is no participation on prior open years of account.

However, there is the potential for an unbalanced portfolio because the annual capacity auctions (which generally take place in October / November) are illiquid and prices are difficult to predict.

A new vehicle must be incorporated and a full application submitted to Lloyd’s by the end of September.

Purchase an existing vehicle

The most common method to commence underwriting at Lloyd’s is via the purchase of an existing LLV. These are advertised for sale throughout the year on the three main members’ agents’ websites.

Standard valuations of vehicles for sale are based upon the previous year’s auction prices and the latest syndicate mid-point forecasts for any open years of more than 15 months. No value or liability is attributed to the current underwriting year. Bids can be made at a premium or a discount to the valuation, depending upon supply and demand, the outlook for the open years and future underwriting prospects.

Whilst the purchase of a vehicle includes taking on the liability of the open years, any reserving risk can be reflected in the bid price. This method of entry can allow immediate cash flow with profitable open years, if applicable, but more importantly gives the certainty of a balanced portfolio (any unwanted capacity can be sold at the next auctions or dropped post the auctions) and a more flexible timescale.

Discuss your requirements directly with us

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