BMS still has sights on Lloyd’s syndicate

(Re)insurance broker BMS has not abandoned hope of setting up a full-blown Lloyd’s syndicate despite launching a managing general agency (MGA) at the beginning of April.

“We intend to re-approach the Lloyd’s application once the market is ready for it,” said Darren Doherty, managing director of the new MGA, called Pioneer Underwriting.

BMS announced the launch of Pioneer yesterday. The MGA, which started writing on 1 April, will have an initial capacity of £62.5m, and is 100% backed by Liberty Syndicates. The capacity will increase to £125m within three years. The MGA will only source business from BMS.

BMS had applied to Lloyd’s for a syndicate licence, but was one of around eight companies who were turned away late last year as the corporation restricted new capital entry in response to softening rates.

While setting up an MGA was a second choice for BMS, Doherty says it largely serves BMS’s needs. “It is a different entity, there is no doubt, but where BMS were approaching it from, it is not a dissimilar outcome,” he said. “It fulfils most of what we are trying to achieve as a strategy.”

To avoid the inherent conflicts of interest that arise from a broker owning an underwriting entity, BMS has placed the Pioneer operation into a separate limited company vehicle. “There is complete separation,” Doherty said. “There is a holding company above both entities but with no managerial influence on either of the boards.”

He adds that the MGA will not act as a market leader on business, and so will not set rates and terms.

While tight-lipped on the benefits of the MGA to BMS and its business plan, Doherty said the new entity will allow the broker to offer a new source of capacity to clients. “One of the ways clients differentiate brokers is in their ability to deliver underwriting capacity,” he said. “In terms of the armoury BMS has as a broker, this is an additional market we have access to.”