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Reinsurance for Lloyd's agents from Bermuda SPV


HAMILTON, Bermuda—An unnamed group of investors have established a Bermuda-based sidecar to provide reinsurance to Lloyd's syndicates.

The special purpose vehicle, called Syncro Ltd., has been established in Bermuda, although it has not yet applied for authorization from the island's regulator, the Bermuda Monetary Authority.

Syncro is looking to offer Lloyd's managing agents additional capacity in the form of reinsurance. According to a statement issued on behalf of the company by international law firm Clyde & Co., Syncro will replicate sidecars, which are typically capital market-backed offshore SPVs offering reinsurance for a limited period of time. "It [Syncro] 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," according to the statement.

A spokeswoman for Clyde & Co., said that the project was in its early stages, with potential investors already lined up. Syncro is now talking with Lloyd's managing agents to assess the market's appetite for additional capacity. Syncro's capital base will be driven by the interest expressed by managing agents, the spokeswoman said.

Andrew Holderness, head of corporate insurance at Clyde & Co. said: "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."