Client Case Study
Asta secures trail-blazing entry to Lloyd’s for the world’s largest ILS fund manager.
“The team at Asta immediately recognised the unique opportunity to bring diverse capital to Lloyd’s. This was combined with an innovative product that offered a new way for reinsurance buyers to manage their catastrophe exposures. Asta’s advocacy in ensuring Lloyd’s understood and shared a vision that was aligned to their own objectives was key to our approval.”
Adam Beatty, Active Underwriter, Syndicate 2357
The key achievements
- Secured approval for the first syndicate at Lloyd’s launched by an ILS manager.
- Introduced new, diverse capital aligned to Lloyd’s Vision 2025 strategy
- Worked with Lloyd’s to fully understand how ILS works and its benefits to the market
- Initial oversight of transactions and collateral arrangements was key to continued support of Lloyd’s and future growth of the business
- Achieved lower than average operating costs to help maximise returns to investors
- Established a blueprint for future ILS vehicles entering Lloyd’s
Nephila Capital, the world’s largest ILS fund manager, had an ambition. They wanted to establish a syndicate at Lloyd’s, as they wished to take advantage of the cost efficiencies, rated paper and wider distribution opportunities the market offered.
For Lloyd’s, Nephila offered an exciting opportunity that aligned perfectly with their strategic Vision 2025, as it would introduce new, accretive capital and bring an innovative product to the market.
Securing entry to Lloyd’s is a serious challenge for any new syndicate. Nephila’s proposition featured a layer of complexity that needed to be overcome before their application could be taken seriously.
The challenge for the Asta team was to bring Nephila and Lloyd’s together and deploy the necessary knowledge and advocacy that ensured an alignment of interests. The team also had to demonstrate a clear understanding of ILS and the mutual opportunities it presented for both parties.
The first step in securing Lloyd’s support was to ensure that Nephila’s ownership and fund structure was fully understood. It also needed to have the flexibility to align with Lloyd’s Corporate Member structure. This was no mean feat, requiring skilled negotiation, detailed legal input and – unusually – a presentation direct to the Lloyd’s Franchise Board.
This approach resulted in Lloyd’s initial support for the Nephila proposition, but there was still plenty of work to do. The Lloyd’s New Entrant Process had to be successfully navigated before in principle – and subsequently final – approval could be granted.
When it came to the hard yards, the knowledge and experience of the Asta team was invaluable. The team helped to produce a credible business plan, complete the necessary applications, guide everything through due diligence and resolve any issues that arose.
Asta also provided unrivalled experience of the market and the expertise and diverse technical skills needed to structure the deal. Once agreed, this met with the approval of Lloyd’s and the alternative capital model of Nephila, and the first ILS backed syndicate at Lloyd’s was successfully established.
After final approval was secured and underwriting began, Asta remained heavily involved to support both Lloyd’s and Nephila, providing oversight of individual risks until all parties were comfortable with the business being written. We also ensured that compliance with regulations and Lloyd’s minimum standards was being met.
Understanding ILS was key for Lloyd’s, as was Nephila’s understanding of the Lloyd’s market and how it might benefit them. It was in this area that the Asta team came into its own. We engaged early with both parties to understand objectives, and brought them together to work through the detail needed to structure a deal.
The result was the successful entry to Lloyd’s for the first ever ILS backed syndicate, and with 11 months from application to the start of underwriting, phenomenal speed to market was achieved.
As a consequence of our work with the Nephila syndicate, Lloyd’s is now established as a credible, lower-cost platform to attract and develop ILS business. Through the Capital solution of Blueprint One of the Future at Lloyd’s strategy, new structured investment opportunities are also being created for ILS capital to enter the market more easily.
After Nephila migrated to its own independent managing agency in October 2019, they have further developed their ILS business at Lloyd’s following the in principle approval of Syndicate 2358 in June 2020.
Asta is the leading third party managing agent at Lloyd’s. We support a diverse range of businesses by delivering cost-effective underwriting management solutions tailored to your exact requirements and business lifecycle. Our goal is to help you achieve your ambition – of establishing a successful, profitable underwriting business.