Options for underwriting at Lloyd’s - Overview

Over the last two decades, we have launched twenty start-up syndicates and established eleven new Managing Agents for our clients operating in Lloyd’s.

We work with aspiring new entrants to find the route into Lloyd’s that best meets your needs. Depending on your circumstances and objectives, we offer a range of bespoke solutions including a traditional Full Syndicate, or a Special Purpose Arrangement or Syndicate-in-a-Box offering a faster, more streamlined way for new entrants to access the market.

Your options for underwriting in the Lloyd’s market?

Requirements Syndicate-in-a-Box Full Syndicate Special Purpose Arrangement (SPA)
Qualifying Criteria
Best Suits Established and successful MGA/MGUs wanting to take underwriting risk in their own business. An existing insurer, with strong franchise value that would benefit from Lloyd's value proposition. A business or capital provider seeking to learn about underwriting at Lloyd's.
Single geography or product line experts without the scale to set up independently. A significant, established and successful MGA/MGU wanting to take underwriting risk in their own business. An SPA writes a single Quota Share reinsurance contract of another Lloyd’s syndicate. It can reinsure business introduced by you to that Syndicate. The maximum cession allowed on classs/segment ceded to an SPA is 90%.
Innovators offering different types of product, distribution, services or operating model. Innovative start-up businesses with immediate scale offering different types of product, distribution, services or operating model. Note: An SPA can be developed into a Syndicate in the future (subject to the Syndicate application framework).
Classes All Classes – Simple and Complex risks Single or limited number of classes - typically Simple risks Whole Account or specified classes
Geography Worldwide Single Country / Limited geographic spread Worldwide
Minimum GWP (year 1) £100,000,000 £20,000,000 £10,000,000
Expense Ratio Lloyd's requires all new applications to demonstrate an expense ratio less than 35% by year 3
Peak Zone Catastrophe Exposures Limited - providing deemed accretive No Limited - providing deemed accretive
Underwriting "tail" of business Short & Long Tail Short Tail strongly preferred Short & Long Tail
Ability to Underwrite from a Box at Lloyd's Yes No No
Lloyd's Entry Process and Costs
Target time from Application to Approval 5-12 months 3 months 4-6 months
New Syndicate / SPA Application Fee £200,000 £100,000 £75,000
New Member Application Fee £52,000 £52,000 £52,000
Annual Subscription 0.36% of Gross Written Premium
Central Fund Contribution 1.40% of Gross Written Premium for the first 3 years of account and 0.35% thereafter
Note: There is an option to defer the higher rate until years 4-6 (with the differential based on the Gross Written Premiums from Years 1-3)
Life Cycle Continuous subject to annual approval of the business plan 3 years, after which there are 3 options: Continue as an SIAB, graduate to a "full" Syndicate or cease trading Continuous subject to annual approval of the business plan
Initial Business Plan Loss Ratios Lloyd's Market Average
Initial Capital Setting Lloyd's Capital Model
Operating Requirements
Capital:
Capital Model Solvency 2 compliant internal model required after 2 years Lloyd's Capital Model Solvency 2 compliant internal model - Follows "host" Syndicate
Oversight:
Business Plan Full annual plan required Initial 3 year plan - limited annual update Full annual plan required
Line Sizes Limited approach to dispensations Flexible approach to dispensations Limited approach to dispensations
Reporting Full Lloyd's Reporting Reduced Lloyd's Reporting Full Lloyd's Reporting
Managing Agent Costs & Fees
Start-Up Fee To be agreed on a case by case basis
Annual Fee To be agreed on a case by case basis. Lloyd's reports that market average is between 0.5% to 1.0% of Stamp Capacity*
Profit Commission To be agreed on a case by case basis
Basis for annual operating costs Time & Materials
Other Costs
External/Legal/Other Approximately £750,000 Approximately £300,000 Approximately £300,000

* Stamp Capacity = Lloyd's term maximum annual premium (less acquisition costs) the Syndicate is allowed to underwrite. Stamp Capacity is typically 90% of Gross Premium.