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). Either 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 rules.

Overseas investors must do so via a UK domiciled vehicle.

Create or purchase?

A new vehicle has no legacy from previous years of account. However, capacity in the October/November auctions can be illiquid and prices can be difficult to predict, so there is the potential for an unbalanced portfolio. Cash flows from underwriting will be delayed (due to the Lloyd’s three-year accounting methodology). Any documentation for the creation of a new vehicle must be submitted to Lloyd’s in mid-September, prior to commencing underwriting the following January.

Existing LLPs and NameCos are advertised for sale on our website here.

Vehicles are valued based upon the previous year’s auction prices and the latest syndicate mid-point forecasts for the open years of more than 15 months. No value or liability is attributed to the current underwriting year. Bids may be submitted at a premium or a discount to the valuation, depending upon supply and demand, the outlook for the open years and future underwriting prospects. 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 syndicate capacity can be sold at the next auction or dropped post the auctions) and a more flexible timescale. For these reasons, this is the most common entry method for Alpha’s new clients.