Ironshore to form new Lloyd’s syndicate

Ironshore’s Pembroke managing agency has received approval from Lloyd’s to establish a new syndicate that will be begin writing business in 2014.

The new syndicate will be called Acapella.The new syndicate, numbered syndicate 2014, will be a conversion of Pembroke’s special purpose syndicate 6110, which sources business solely through quota share reinsurance of business underwritten by Pembroke Syndicate 4000.

According to details from Ironshore “the SPS was established in the 2012 year of account with a stamp capacity of £25 million, backed entirely by Names’ capital, provided by Names advised by Hampden Agencies Limited.”

“SPS 6110’s stamp capacity was subsequently increased to £45 million for the 2013 underwriting year. Lines of business underwritten include property treaty, personal accident and contingency, as well as several short tail lines. SPS 6110 is the first of its kind to convert into a stand-alone syndicate, and will continue to be backed exclusively by Lloyd’s Names.  Syndicate 2014 is targeting £65 million of premium in its first year.”

Commenting on the move Justin Wash, managing director of Pembroke said “this is a significant step toward Pembroke developing its third-party business, while leveraging Ironshore’s distribution network to bring new business into the Lloyd’s market that is supported by private investors. We have a strong appetite to grow the third-party business and actively engage with other potential investors, providing distinctive distribution benefits to the Lloyd’s market.”

Commenting on the deal to Bermuda:Re, Justin Wash and Mark Wheeler, directors of Pembroke Managing Syndicate, provided us with further thoughts on the move:

How confident are Ironshore and Pembroke that they can differentiate their third party offering in what is an already crowded space?

Ironshore is providing Acappella with access to the Lloyd's market through it's Pembroke Managing Agency. This is not a crowded space there are only a limited number of entities with the resource and appetite to assist non-aligned capacity establish an underwriting platform in Lloyd's.

Pembroke is able to offer a robust risk management framework with endorsement from the Lloyd's Franchise Performance Directorate. It is able to assist third party capital by providing access to its global distribution platform. In addition through its offshore IronServe back office capability it is able to deliver operational infrastructure at highly competitive rates.

What will be the geographical focus of this business and why was London (rather than perhaps Bermuda) the location of choice?

The third party capital is provided by Lloyd's Members' Agents. Acappella provides a new venture for them to engage with the market. Lloyd's provides access to $40 billion market. It is an ideal platform to cultivate a new business because of capital efficiency, global licences, it's AM Best A+ rating. The Lloyd's brand is of great value to any new business as is the scale and longevity associated with it.

What are your expectations regarding appetite for third party capital at the year-end renewals?

There is a strong appetite for new capital to engage with Lloyd's. The real question is what value can that capital bring to the market in terms of new business or strategic distribution. There are extremely high barriers to entry to establish a business in Lloyd's. It is right that the valuable franchise and power of mutuality should be carefully protected. Pembroke is committed to ensuring that these standards are maintained and promulgated. It is an important part of our business model which we will nurture carefully.