London Innovation Underwriters to build $1bn Lloyd’s book via London Bridge 2

London Innovation Underwriters has been established by the listed Financials Acquisition Corp, a special purpose acquisition company launched in 2022 by sector executives William Allen and Andrew Rear, with a plan to deploy capital into the Lloyd’s market via London Bridge 2 PCC, to generate insurance-linked returns for investors.

Financial Acquisition Corp was sponsored by FINSAC LLC and had plans to raise £150 million through a listing on the London Stock Exchange (LSE).

It then entered talks on a deal to launch a £1 billion capacity listed Lloyd’s underwriting investment vehicle, that will use ILS structure London Bridge 2 PCC Ltd. to channel institutional capital into the market.

Now, the entity London Innovation Underwriters has been formally announced, with a strategy of becoming a listed operating company deploying funds into the Lloyd’s of London insurance market.

Financials Acquisition Corp will enter into a business combination with LIU and seek to raise a significant sum of equity capital through a listing of LIU on the Main Market of the London Stock Exchange.

LIU intends to access Lloyd’s market underwriting expertise via London Bridge 2 PCC Ltd., the third party protected cell risk transformation vehicle that enables institutional capital to access the Lloyd’s insurance market.

“The Company believes that through its combination with LIU, it can create an efficient vehicle for investors to access attractive returns in the Lloyd’s insurance market without paying significant goodwill or adding further fee structures,” it explained.

More details on the strategy have emerged, with a plan to “substantively replicate the performance of Lloyd’s through a similar sized Broad Market Exposure book, as well as establishing an Innovation and Seed book to gain exposure to growth syndicates focused on fast-growing risk classes, new approaches to data in underwriting, and new models of risk transformation.”

Working with Aon as its core reinsurance broker, LIU has secured “significant conditional capacity commitments from syndicates”.

It intends to support those capacity commitments through Capital Raising as Funds At Lloyd’s (FAL) via London Bridge 2.

The company said that, “The book of reinsurance is currently anticipated to have a capital requirement below 50%, which would give LIU sufficient capital to support up to £1 billion of capacity assuming a successful completion of the Proposed Transaction.”

Will Allen, Chief Executive Officer of the Company commented, “We believe LIU will offer a unique opportunity for investors to gain efficient access and diversified exposure to the Lloyd’s market with liquidity. We are pleased with the initial reaction we have received from both investors and underwriters and look forward to the next stage of the transaction.”

As we reported, Lloyd’s CFO Burkhard Keese had said at our conference earlier this week that London Bridge 2, the Lloyd’s insurance-linked securities (ILS) platform, has a full pipeline.

It appears London Innovation Underwriters could be a significant component of that.