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Why invest at Lloyd’s

Why invest at Lloyd’s

The combination of an attractive rate of return, diversification and double use of assets is unique to Lloyd’s.

Attractive returns

Hampden’s own track record of achieving an average annualised return of 21.5% 1 between 2001 and 2022 illustrates the potential for investors if they are prepared to take a long term view. Even in a less good market, for example between 2012 and 2020, we achieved an annualised net return of 6.4% 2 as we adopted a defensive approach to the market which produced positive results.

Efficiency of capital

Another unique feature of investing at Lloyd’s is that assets other than cash can be used to support underwriting thus allowing a secondary return for the investor. This is known as the double use of assets.

Diversification and Low Correlation

Investing at Lloyd’s provides an additional way to diversify a portfolio. Furthermore, underwriting returns have historically had a low correlation with all traditional asset classes.

Well managed market

With long-term profitability of the market as its core priority, Lloyd’s has put in place a number of measures over the last two decades to maximise investor gains and minimise risk.

Most significantly, they have made it mandatory that all new participants in the market underwrite with the protection of limited liability. They have also taken steps to improve underwriting performance which has resulted in a continuing reduction in the frequency of claims for 2022.

Another important measure has been to create the Lloyd’s Performance Management Directorate (PMD) established to protect the Central Guaranteed Fund, monitor and improve the long term performance of Lloyd’s syndicates and raise standards across the market. This means the market today is very different to that prior the formation of the PMD in 2002.

The Central Guaranteed Fund is available, at the discretion of the Council of Lloyd’s, to meet any valid claim that cannot be met from the resources of any member. This makes a Lloyd’s policy something that buyers of insurance can rely on.

Hampden Agencies is regulated by the Financial Conduct Authority (FCA) and all managing agents and Lloyd’s by the Prudential Regulation Authority (PRA), making Lloyd’s one of the most carefully managed markets in the UK.

  1. Annualised return is the average annualised return (as a % of capital invested) of discretionary accounts managed by Hampden where we have official market results or estimates from Q4 2003 to Q3 2022. Years of account 2021 and 2022 are estimates based on Lloyd’s syndicates submissions as at Q3 2023. Returns are net of fees and charges but pre-tax.
  2. Annualised net return shown is the average annualised return (as a % of capital invested) of Hampden private client accounts from Q4 2011 to Q1 2021. Returns are net of fees and charges but pre tax.