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.
Find out more about our range of solutions:
