Lloyd’s seeing an abundance of investment activity: Barclays’ Morris

The hardening market conditions are driving a flurry of capital raising at Lloyd’s from scale-up, start-up and run-off deals, reports James Morris, MD, head of UK insurance and captive banking, corporate banking at Barclays.

In an interview with The ReInsurer, Morris described the market as very busy.

“We are seeing an abundance of activity,” he said. “We probably have never been busier as a team supporting it. There is a lot going on in the scale-up space and we are supporting many syndicates there. There is the emergence of some start-ups, too, that are really exciting.”

One example Morris pointed to is the Ki syndicate announced in May by Brit in collaboration with Google. This week, Ki announced it has raised $500mn of committed capital from Blackstone as well as Brit’s Canadian parent Fairfax Financial.

Morris pointed to the hardening market conditions as a driver of the activity. 

He said prices are being forced up by factors including the claims environment and weak investment returns. Price increases in US casualty are particularly high, which Morris said is “attracting investment, especially from private equity as the returns are very attractive there”.

The run-off sector is also emerging as a theme, Morris says.

“Clients and syndicates are looking to optimise their balance sheet, and Solvency II and capital costs are being more understood, so good companies are stripping off certain books of business,” he said. 

“So we are seeing lots of activity from many different pockets,” Morris added.

On top of that has come an active hurricane season in terms of storm formations. Morris also noted the explosion in Lebanon and wildfires that continue to rage on the US West Coast. 

“It has been pretty thick and fast in terms of events,” he said. “We are on standby and will continue to support the sector as we have always done”

Morris continued: “We anticipate more storms and therefore more insured losses and therefore more needs from the bank. Specifically, we have a market leading solution which is a shock loss facility designed to provide rapid short-term liquidity into the borrower that works pretty well, and there is always demand for that product.”