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Why invest at Lloyd’s

Why invest at Lloyd’s

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

Attractive returns

Hampden’s own track record of achieving an average annualised return of 24.2%1 between 2003 and 2022 illustrates the potential for investors if they are prepared to take a long term view. Even in a more challenging market, for example, between 2012 and 2020, we achieved an annualised net return of 6.4%2.

Less Exposure

Improved data and reporting using sophisticated technology means that it is significantly easier to forecast potential outcomes thereby improving exposure management for investors to a high level of insurance claims. In addition the management team at Lloyd’s continues to make the long-term profitability of the market its core priority

Efficiency of capital

Another unique feature of investing at Lloyd’s is that as an alternative to cash you can use other assets you are holding such as stocks and shares, to support your underwriting. Alternatively you can secure a bank guarantee supported by property, an art collection or another high value form of investment. This allows you to create a secondary return on your investments.

Tax and estate planning benefits

Underwriting at Lloyd’s is not technically considered to be an investment but rather a trade and as such its activities are taxed as being those of a trading entity.

Amongst the benefits is the availability of Business Relief that enables UK tax payers to claim 100 per cent of the value of the underwriting business against inheritance tax after two years of ownership.

Family offices and trusts can also take advantage of the diversified earnings opportunities and succession planning options available through ownership of an underwriting business. Investors can use either a limited company or partnership as their Lloyd's underwriting business, which can be passed down to the next generation.

A well managed marketplace

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 which has resulted in a continuing reduction in the frequency of claims for 2022.

Another important measure has been the creation of a Central Guaranteed Fund that 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.

Regulated by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA), Lloyd’s is one of the most well regulated markets in the world.

Portfolio diversification

Year on year results show that the returns on investment at Lloyd’s has a low correlation with those from other asset classes. This makes the Lloyd’s market an exceptionally effective way to diversify an investment portfolio and, in particular, reduce an investor’s exposure to a downturn in the stock market.

  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.

Get in touch

To find out more about Lloyd's, please give us a call or send an email.

40 Gracechurch Street,

Alistair Troughton

Sales & Marketing Director