Insurance centre starts up with pounds 2.5bn target

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The Independent Online
THE TROUBLED Lloyd's of London faces a new competitive threat today with the opening of the London Underwriting Centre, a powerful new insurance market that expects to take pounds 2.5bn worth of insurance premiums in its first year of operation.

The combined capital and surplus of the 22 participants in the LUC totals about pounds 6bn, compared with Lloyd's current capacity of pounds 8.8bn and possible capacity next year of pounds 7.5bn.

The new centre has enough resources to underwrite pounds 18bn worth of premiums.

In spite of the new market's formation, backed by some of the London market's most influential insurance companies, Lloyd's is in talks with the LUC to set up a combined back-room bureau, which would provide administrative services for the general or non-marine insurance market.

'At the moment we both have our own bureaux. Why shouldn't we have one which serves both markets?' said Victor Blake, chairman of the new centre. 'The new bureau would do the same function for Lloyd's as it does for the companies.'

The two markets will collaborate on cost savings in administration but compete with each other for business.

The bulk of business initially handled by the new centre will be general insurance, although some participants will be insuring marine and aviation risks. Many of the companies operating there will be trading in reinsurance business, taking on liabilities that other insurers do not wish to retain.

(Photograph omitted)

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