Zurich Insurance Group is set to introduce its inaugural Lloyd’s of London syndicate within weeks as it pursues speciality insurer Beazley.
Beazley is also a participant in the Lloyd’s market.
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The move was first reported by the Financial Times (FT), which cited CEO Mario Greco as saying that the company is close to completing arrangements for the new syndicate, which would allow Zurich to utilise private capital for underwriting risks within the Lloyd’s market.
In an e-mailed statement to Life Insurance International, the insurer acknowledged the report as “factual” but refused to comment further.
The development comes as an alternative strategy should the insurer’s ongoing bid for Beazley fail.
Recently, Zurich sweetened its buyout offer for rival Beazley to $10.2bn (SFr8.06bn).
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By GlobalDataAccording to Greco, the bid was the company’s fifth proposal to purchase Beazley, a group known for offering insurance against risks such as cyber incidents.
Discussions between Zurich and Lloyd’s are reportedly in advanced stages, with a possible launch of the new entity as soon as 2 April.
When asked, Zurich did not clarify whether it will proceed with its syndicate if it manages to acquire Beazley, the news publication added.
According to a source, Zurich’s planned syndicate is expected to target annual premium revenues running into several “hundreds of millions of pounds”.
The move could provide an additional route for Zurich to develop its speciality lines business, especially as more private capital enters the Lloyd’s marketplace.
Greco was quoted by the FT as saying: “You can do deals on the Lloyd’s platform where you access private capital, which is different from capital offered by the reinsurance companies.”
He noted that terms available through Lloyd’s are “competitive with the best conditions you can find outside” the market.
Private investment is playing a larger role in Lloyd’s, challenging traditional reinsurers such as Munich Re and Swiss Re, the news publication noted.
Blackstone has joined forces with AIG for a Lloyd’s syndicate, while Oaktree, majority owned by Brookfield, recently launched a syndicate in partnership with Allianz.
Zurich did not provide details about whether it would partner with other investors for its prospective Lloyd’s operation.
