Briefing: Is Lloyd’s ‘undervalued’ as an investment opportunity?

The one constant in UK general insurance (UKGI) seems to be a ferocious appetite for M&A as a lever for business growth.

For example, according to an April 2025 blog article from consultancy MarshBerry, 152 UK insurance distribution transactions were announced in 2024 – only one more than the number of publicised deals in 2023. This is a vast improvement on the 74 deals announced back in 2016.

The majority of the acquisitions covered in the hallowed pages of the trade press centre on regional buys to build out company footprints, or focus on international expansions – typically into Europe – as businesses hunt for targets that are just the right size.

Quarter four of 2024 into early 2025 also seemed to mark the era of consolidator megamergers – even insurer giants such as Aviva and Ageas opened their wallets to buy Direct Line Group and Esure respectively.

However, one segment of UKGI that is quietly ripe for further investment – according to consultancy Oxbow Partners – is Lloyd’s and the London market.

Its Navigating M&A in the London Market report, published in April 2025, highlighted that profitable financial results over the last two years in particular, paired with distribution access to specialty risk players, makes the London market “an attractive option for investors” – especially as around 27 “Lloyd’s syndicates are potentially open to new ownership”, equating to an estimated “£11bn gross written premium (GWP) or 20% of the market” that could be up for grabs.

Despite these noteworthy plus points, the report stated that “London market players are still undervalued compared to other global peers”.

It said: “Lloyd’s remains undervalued compared to leading US specialty players and global reinsurers.

“On a price to book ratio basis, the average of the listed Lloyd’s insurers – Beazley, Hiscox and Lancashire – is 1.4 times. This is lower than the averages of both US listed carriers (1.8 times) and global reinsurers (2.1 times).

“The Lloyd’s carriers are also valued at a lower price to earnings ratio than their global peers.”

Strategic opportunities

For Oxbow Partners, there are five main reasons why investors should view Lloyd’s and the London market as an attractive option for acquisition spend – whether targeting “larger syndicates with larger balance sheets and a clear track record of earnings” or “small, often highly specialist syndicates”.

These reasons are global distribution, greater capital efficiency, concentrated specialist underwriting, continued market growth and potential efficiency savings through digitalisation – although I feel the woe begotten Blueprint Two deserves its own article.

The management consultancy further listed numerous ways investors could get involved with the capital’s insurance hub, including more passive investment routes such as tapping into reinsurance cell company London Bridge 2, or actively backing a class one syndicate with its own managing agency or adopting a syndicate in a box (SIAB) model, which is subject to certain restrictions.

A SIAB has to write less than £100m GWP in its first year, for example, and should predominately write short-tail business.

In terms of the 27 syndicates Oxbow Partners has ringfenced as investment gold dust, it has categorised these – broadly speaking – as falling into one of five buckets. These are self-reinsurance, specialist, run-off, growth and tech.

The firm concluded: “We believe that the London market presents an excellent opportunity for investors. However, there needs to be strategic, operational and cultural alignment to make it work.

“Potential owners of Lloyd’s assets need a clear vision of what the acquisition will be used for and how it will change post-investment.”

Futureproofing the market

In Q4 2024, over coffee with a broker, the subject of private investment into Lloyd’s came up in conversation.

While pre-emptively agreeing with Oxbow Partners’ stance that Lloyd’s and the London market are attractive investment opportunities, the broker also described this field as a “murky underworld”.

This was not a sentiment that Barry Reynolds, executive director for London markets at broker Verlingue, recognised, however.

He told me that private investment into Lloyd’s typically refers to capital that is used to back syndicates.

He continued: “Lloyd’s is a very different place to what it was, going back to when it was individual names on syndicates. The market has done a good job of futureproofing itself and attracting investment.

“The market sets itself up to be able to take in external investment, which is only a good thing.

“The market is a very different place [now] in terms of there’s a lot more central control in the way that businesses operate, which is a good thing.”

According to April 2025 research published by professional services firm KPMG, based on a survey of 155 UK directors conducted in March 2025, 54% of respondents believe that attracting more private capital back into the UK is urgently needed to boost London’s growth potential.

Where better to house such capital than the Square Mile?

Oxbow Partners’ report noted: “We believe that the London market currently represents an interesting opportunity for investors.

“The market has been going through a purple patch in recent years, aided by significant rate improvements across many lines. This has resulted in strong growth in both premiums and earnings.

“While there are potentially softer market conditions on the horizon, London market players are still undervalued compared to other global peers and therefore offer an attractive option to gain access to specialty risks.”