Brit Launches the First ILS Fund at Lloyd’s

December 9, 2019

Specialty insurer Brit Ltd. has launched Sussex Specialty Insurance Fund to offer insurance linked securities (ILS) investors access to Lloyd’s risk.

It is the first ILS fund in the Lloyd’s of London market.

The SIF will allow Sussex to offer institutional investors direct access to Lloyd’s-underwritten specialty insurance and reinsurance through the ILS fund structure. The fund will access Lloyd’s by providing capital to support Syndicate 2988, Brit’s third-party capital backed syndicate that has nearly $200 million of stamp capacity for 2020 and writes business alongside Brit’s main syndicate.

Brit said the fund will enable investors to access a diversified basket of risks from across the Lloyd’s market, underwritten by Brit’s global platform.

“Brit has worked closely with Lloyd’s as part of its strategy for The Future at Lloyd’s and the launch of Sussex Specialty Insurance Fund is closely aligned to the objectives laid out in its recent blueprint, in particular around capital,” said Matthew Wilson, CEO, Brit.

“This is exactly the type of initiative that Lloyd’s is eager to support,”John Neal, CEO, Lloyd’s, commented, adding that Lloyd’s wants to make it easier and simpler for new sources of capital to enter the market and attach to risk.

The ILS fund will sit as part of Brit’s Sussex Capital ILS platform and adds to other Sussex ILS funds including the property catastrophe reinsurance focused Diversified Fund and the Worldwide Property Cat Sidecar, launched in 2018 and 2015 respectively.

Last year Lloyd’s embarked on a 10-week process to develop ideas for its future. Lloyd’s said it received more than 4000 suggestions and comments from market participants, customers and other stakeholders.

Among its six aims, the final Future at Lloyd’s report included encouraging flexible capital that can simply and effectively access a diverse set of insurance risks on the Lloyd’s platform and an ecosystem that helps all market participants develop new business and provide better service to their customers.

Growth of the insurance linked securities (ILS) market reached $93 billion in 2018, up from $88 billion during the prior year, according to the new ILS Market Update from Willis Re, the reinsurance division of Willis Towers Watson. Willis Re noted that 2018 marked the second-most active calendar year for cat bond issuance after 2017’s record of $9.7 billion

In the face of multiple smaller catastrophic events in 2018 and a meaningful series of catastrophes in 2017, non-life cat bond issuance remained strong with about $9.2 billion of new capital delivered, said the report, defining cat bonds as ILS transactions with meaningful liquidity.

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