Brokers building their infrastructure, US regional insurers seeking global capital, and London Bridge 2 at Lloyd’s are sources of London market investment interest, according to Argenta Private Capital.
Demand has “rocketed” this year for Argenta Private Capital, which links together risk and capital, the company said.
Kate Tongue, executive director, and Robert Flach, managing director, Argenta Private Capital (APC), were present at the Rendez-vous de Septembre in Monte Carlo.
The pair met with GR to explain where demand was coming from for APC, which focuses on linking investor capital with underwriting risk, particularly in the Lloyd’s market.
Tongue said: “The interest is really quite deep. The syndicates are largely composite, so it’s been really diversified. That enables state insurers to have diversified access to global risk. US state insurers are our target market, and they’re very keen to get access.”
Flach pointed to single-state US insurers of local business, in particular, in places like Maine.
“It will be local business, but there will be a balance sheet of hundreds of millions. They could set up with a member of Lloyd’s. We’ve got probably about a dozen of those.”
The corporate side of APC, said Flach has “rocketed” in the last two years, leading it to be the go-to consultant to help brokers set up their infrastructure.
Flach reckoned that the firm was currently working with a dozen or so brokers.
One recurring topic has been the Lloyd’s market’s London Bridge 2 (LB2) vehicle for insurance linked securities.
Regulated by the PRA and the FCA, LB2 is an independent insurance risk transformation company that is licensed to reinsure Lloyd’s business and issue securities. In doing so, it looks to help raise the capital to fund those transactions.
“One of the benefits of its structure,” said Tongue, “is that you can extract the profits without any UK tax. Some people are in jurisdictions with higher tax rates than the UK, so they don’t mind paying some UK tax. And they’ll just take profits out as a dividend. So, it doesn’t suit every investor.”
Flach took time to look towards the future. This year has seen many investors sat on the sidelines, waiting to see how the industry performs this year. He acknowledged the current landscape, saying that he thought that momentum was gathering and that these investors would soon come onboard.
“Now,” he said, “they’re thinking they want to do it for 2024. I’d like to think that’s because of the half-year results. I think there’s a momentum in the reinsurance market. There are people who we speak to through brokers who are saying that they really want to do this but they’ve run out of time for this year. There won’t be a tipping of capital immediately, but the momentum is there.”