Keese: Lloyd’s has ‘long way to go’ in attracting institutional investors despite increasing capital returns

By Ryan Hewlett

March 10 - (The Insurer) - Outgoing Lloyd’s CFO Burkhard Keese remains confident in the market’s ability to attract institutional investors to grow investment platform London Bridge, but said there is a “long way to go” before the market provides its targeted returns.

Speaking to The Insurer following a trading update that showed Lloyd's had grown its top line by 6.5% in 2024, Keese said making the market more attractive and accessible to institutional investors continues to be a strategic priority for the Corporation.

While Lloyd’s has not yet disclosed its return on capital for 2024, Keese noted that since 2017, the market has on average earned just 5.6% for its investors per year.

While the figure marks a 2.1 percentage point increase on the 3.5% long-term return reported last year, Keese said the market has a “long way to go” before it meets the 10% to 15% return on capital target.

“There is a long way to go, and that is my core message,” he said. “We have seen two good years (of returns) but two good years are not enough to make up for the losses from the soft market, the losses from COVID-19, the losses from the invasion of Ukraine. We need to earn that money back.”

Keese pointed to London Bridge 2, the risk securitisation platform designed for institutional investors. The Lloyd’s investment platform reached total capital deployment of $1.92 billion across 19 cells at the end of 2024, with $2.55 billion committed from institutional investors.

“My expectation is that this will grow but it's always very difficult to forecast what type of transactions are possible,” he said. “What I can say is our pipeline was never fuller than it was at the beginning of this year.”

London Bridge enables qualifying institutional investors to deploy funds into the Lloyd’s market, with Lloyd’s members and managing agents using the vehicle to manage capital and risk management requirements by attracting new sources of capital and reinsurance protection.

Keese noted that while the pipeline is strong, the “complexity” and “tailor made” nature of the deals being structured often leads to long lead times.

As previously reported, eight Lloyd’s managing agents are utilising London Bridge, with 10 new institutional investors supporting risks underwritten in the Lloyd’s market.

Most recently, this publication revealed in December that AIG was set to commence underwriting from its third-party-capitalised reinsurance syndicate on January 1, 2025. Syndicate 2478 is supported by third-party capital from funds managed by Blackstone through the London Bridge 2 PCC transformer platform.

Other notable milestones during 2024 include the launch of the Fidelis Partnership's Syndicate 3123 and the second Fuchsia 144A property cat bond sponsored by Beazley.