Review

New strategic venture in insurance-linked capital markets

Leadenhall Capital Partners LLP is a joint venture established in 2008 between Amlin, John Wells and Luca Albertini. John and Luca have significant experience in insurance-linked capital markets. Leadenhall is authorised by the Financial Services Authority to manage and advise third party offshore funds. Its initial focus will be to manage funds investing in insurance-linked assets.

For insurers, the capital markets have provided alternative sources of capital and new instruments at a time when capital and risk management have become increasingly important. For investors, insurance related assets have provided a new asset class with an alternative risk return profile but with very low correlation to traditional equity, fixed income and real estate asset classes. The insurancelinked securities market has grown exponentially in the last few years and increasingly insurers and reinsurers are participating as buyers or sellers of protection.

Leadenhall is the first joint venture of this kind involving a Lloyd’s insurer. In addition to advising on individual risks, Amlin’s expertise is also available to Leadenhall via the participation of its Group Finance Director and Chief Risk Officer as part of its Board. Amlin will be an investor in the fund.

Leadenhall plans to launch a number of funds which will enable investors to gain differing levels of exposure to insurance linked investments. The first fund is likely to feature investments with a noninvestment grade risk profile and predominantly in the non-life insurance sector. Amlin has committed to provide US$75 million of seed capital to the business.

Dislocation in capital markets has undoubtedly slowed the growth in insurance-linked securities in recent months. However, we believe that in the long term the interplay with capital markets will be a key feature of reinsurance markets. Leadenhall provides an excellent vehicle for Amlin to develop a knowledge of the insurance-linked securities market as well as identifying opportunities to either transfer risk or package risk of others.