This month sees the first ever joint conference between the International Underwriting Association (IUA) and the Lloyd's Market Association (LMA). Previously, the IUA has held its biennial gathering as a solo effort, bringing together several hundred representatives from the London company market to explore the challenges and opportunities facing the international re/insurance business situated in London, but around and about the Lloyd's building. The 2003 conference, however, sees the two sides of the London market combining forces to look at the 'limits of insurability'.

Capital consensus
The coming together of these two bastions of the London market would indicate that finally London is presenting a united front to the world. In years gone past, and despite many initiatives, there has been an 'us and them' scenario, with Lloyd's syndicates and the London companies appearing poles apart.

The wall between the two started being eroded with the advent of corporate capital into Lloyd's in the early 1990s, when new disciplines were introduced by the new capacity providers. Much of the new investment came from international insurance industry sources, and although some, such as PXRE, sufficiently disliked the experience that they exited licking their wounds, such investors now provide the lion's share of Lloyd's capacity.

Lloyd's location
What's more, those that have capital in Lloyd's also have substantial capital elsewhere in the London market. Indeed, Bermudian-headquartered ACE dropped its investment in the Lloyd's market from £896m in 2002 to £725m in 2003, becoming the third largest capital provider for this year behind Amlin and QBE, but was at pains to point out that the capital being freed up was likely to be used elsewhere in its London operations. Benfield Group's 'Reinsurance Market Review 2002-2003', issued at the beginning of this year, notes, in addition, that XL was planning to reduce its capacity on combined syndicates 1209 and 990 for the 2003 year of account from £440m to £400m, and that some of the business was to be taken over by XLWI in London. The formation of Wellington Re, an FSA-authorised reinsurer set up last summer to complement the Wellington operations within Lloyd's, shows further crumbling of the Lloyd's/company market wall.

And new capital has come into the London company market as well as pushing up Lloyd's capacity from £12.3bn in 2002 to £14.4bn for 2003. Endurance has set up an FSA-authorised London market operation, and other members of the class of 2001 are looking seriously at the option. This may counter some of the London withdrawals, as well-known names such as Gerling Global Re have bowed out of the business.

On the tech front
The last time the IUA met, two years ago in Gleneagles, Scotland, the Xchanging Ins-sure Services operation was presented to the delegates. This represented a major move forward in the united face of London, offering as it does back office services to both the Lloyd's and the company market through a merger of the London Processing Centre (LPC) and Lloyd's Policy Signing Office (LPSO). Global Reinsurance, in association with Xchanging, recently hosted a roundtable session looking at the benefits e-business can bring to London market operations, and published in this issue.

In the past, the London market has been notorious in its rejection of technology solutions to streamline its business processes, and the roundtable discussion indicates that the service providers have learnt their lesson; instead of a dictatorial approach, providers say they are now listening to what their customers want and offering tools that meet those needs. Ashok Gupta, CEO of Kinnect, observed: "I'm relatively new to the Lloyd's market, but my view is that if you try to push something on the London or Lloyd's market, they won't accept it. In fact, the way to make sure it is rejected is to try and impose it."

Even so, initiatives in the Xchanging and Kinnect mould are helping unite the London market. As Benfield noted in its review, "These developments perhaps illustrate the increasing convergence between Lloyd's and the London corporate re/insurance market. On every level from corporate capital to more streamlined and centralised administrative functions, Lloyd's is moving closer to its non-Lloyd's peers."

By Sarah Goddard

Sarah Goddard is the editor of Global Reinsurance.