Hampden also mulls new Lloyd’s investment fund as Peel Hunt tests appetite

Hampden Private Capital (HPC) has joined the flurry of investment managers exploring the creation of a Lloyd’s fund that would back a variety of syndicates trading in the market, The Insurer can reveal.

HPC – part of the privately owned Hampden Group, which operates both a Lloyd’s members’ agent and a syndicate – has engaged UK stockbroker Peel Hunt to gauge investor interest for the “Project Leo” initiative, which if it proceeds could see a new Lloyd’s fund listed on the London Stock Exchange.

HPC would provide risk selection for syndicates to support on both a whole account and specific lines basis, according to sources familiar with the initiative. It would likely use the London Bridge mechanism as the platform to apply the risk capital.

Although sources close to the company are keen to stress it is only at an exploratory stage, they acknowledge presentations have been made to potential investors.

It is the latest in an extraordinary flurry of new Lloyd’s investment vehicle proposals designed to capitalise on the market’s improving performance. On an aggregate basis, syndicates trading at Lloyd’s posted an 85.2 percent combined ratio for H1 2023 – the best performance since 2007.

Yesterday, this publication revealed London-listed Lloyd’s investment manager Helios was also in talks with investors about backing a new 2024 sidecar that could propel its capacity from £310mn GWP to circa £600mn.

Led by Lloyd’s veteran Martin Reith, Helios is understood to have engaged Numis Securities to advise on the “Project Tarpon” initiative. It would look to raise in the region of £120mn-£150mn on the basis of a circa 50 percent Funds at Lloyd’s/capacity ratio.

Meanwhile, last week saw the news that London-listed Financials Acquisitions Corp (FAC) is fundraising to create London Innovation Underwriters Ltd (LIU), a new fund that would have capacity of up to £1bn to invest in a “broad array of syndicates”.

“The company believes that through its combination with LIU, it can create an efficient vehicle for investors to access attractive returns in the Lloyd's insurance market without paying significant goodwill or adding further fee structures,” it explained in an 8 September stock exchange announcement.

Like Hampden, LIU proposes using the London Bridge 2 platform – the increasingly popular third-party protected cell risk transformation vehicle which allows easier access for institutional capital into the Lloyd's market.

While Hampden and Helios already have experience in Lloyd’s risk selection, LIU and its sponsor have engaged members’ agent Argenta to advise on its portfolio. The company – which has returned the majority of its initial £150mn back to shareholders – will likely require funds of around £500mn if it is to build a £1bn capacity vehicle. Aon is working to secure conditional syndicate capacity commitments while UBS, HSBC, Panmure Gordon and KBW are co-bookrunners.

FAC CEO Will Allen commented: “We believe LIU will offer a unique opportunity for investors to gain efficient access and diversified exposure to the Lloyd's market with liquidity. We are pleased with the initial reaction we have received from both investors and underwriters and look forward to the next stage of the transaction.”

Hampden declined to comment.

The Insurer Comment:

A reminder of the old adage that you wait ages for one bus to come and then three appear at once.

In reality, it is unlikely that all three similar propositions will succeed. However, it is good to see innovation at work and they also suggest investors may be increasingly keen to access the Lloyd’s market in a passive/follow way. If Lloyd’s is to continue growing to, say, £70bn-£80bn annual GWP then structures like this could prove important…