Syncro, a Bermuda based company, has launched a new investment vehicle to allow Lloyd's managing agencies to increase their underwriting access to additional capacity at any point in the underwriting year.
Structurally it will replicate a Bermudian sidecar arrangement, but will offer a number of significant advantages:
• It will be available to any managing agency irrespective of size, allowing syndicates with small stamp capacity to access the advantages of a sidecar arrangement without incurring the set up costs.
• It will allow participation both for specific lines of business (as with traditional sidecars) or on a whole account basis which plays to the benefits that derive from Lloyd's more diversified business spread.
• Managing agencies will be able to access additional capacity without diluting shareholders' equity or taking on additional debt.
“The creation of this vehicle offers the best of both worlds” commented Andrew Holderness, head of corporate insurance at Clyde & Co who is acting for Syncro. “Under the current regulations at Lloyd's it is very difficult for syndicates to increase underwriting capacity to react to market demands, particularly in the middle of the underwriting year. For those who can demonstrate a genuine business case, this new vehicle will solve that problem.”
