Jardine Lloyd Thompson Group (JLT) and ICAP, the world's largest interdealer broker, are set to establish a joint venture company to operate in areas where the market for insurance, financial derivatives and securities are converging.
The joint venture, owned equally by both groups, will offer a broking service in these nascent markets as well as seeking to originate and structure insurance related transactions.
JLT chief executive Dominic Burke said: “During the past two years there has been a substantial increase in the use and variety of structures by which investors looking for different investment characteristics have committed capital directly to the insurance market.
“We believe, however, that this development is still in its infancy and that the types of risk that will be covered by capital from new sources, the mechanisms by which risk will be covered or managed and the structures and instruments by means of which the capital is subscribed – all these are subject to a process of development that can only accelerate.”
Michael Spencer, chief executive of ICAP, added: “I anticipate that derivatives and securities based on insurance risks will be one of the principal new growth markets of tomorrow.
“We have seen over the past decade the emergence of substantial markets for derivatives on credit, energy, and transport amongst others. We believe insurance is next as there is a clear opportunity for improved efficiency in risk transfer, liquidity, transparency and market access.”
