Leading underwriting adviser Hampden Agencies has been given FSA authorisation to facilitate the buying and selling of investors' interests in limited liability vehicles at Lloyd's of London.
Through Hampden, investors will be able to buy an existing Nameco – a limited liability vehicle that all new Lloyd's members have been obliged to invest in since 2003. This means existing Nameco investors can exit whenever they like instead of having to wait the standard three-year accounting period before the results – giving the dividend payout or loss – of the vehicle are determined.
New investors can therefore buy into a 2002 Nameco due to mature in 2005 knowing what the dividend is likely to be. For 2003 or 2004 accounts maturing in 2006 or 2007, investors will have less of an idea of future profit or loss but, as with any account, they will be buying into the Nameco at a discount, usually negotiated with the existing investor.
Hampden says future dividends are looking strong, with agencies such as Moody's predicting that Lloyd's will make around £6bn in the 2003/04 years of account.
Much of this stems from insurance premiums increasing since the terrorist attacks on the World Trade Centre in September 2001.
Before 2003, investors were allowed to come into the Lloyd's market on an unlimited basis, which meant they risked everything they owned if their Nameco made a substantial loss. But since 2003, investors have been forced to participate on a limited basis, with the Inland Revenue all-owing the same tax concessions as before.
Hampden chief executive Nigel Hanbury says: “Lloyd's has emerged strongly since the World Trade Centre tragedy. Insurance can often be uncorrelated to other investment cycles and investing at Lloyd's is an attractive separate asset class for the wealthier investor.”