$1bn of London Bridge 2 capital flow targeted for 2024: CFO Keese – Artemis.bm

According to Lloyd’s Chief Financial Officer (CFO), Burkhard Keese, the London Bridge 2 PCC insurance-linked securities (ILS) structure is targeted to see around $1 billion of capital flow in 2024, so has the potential to surpass the activity seen through the structure in 2023.

Speaking during a media call after Lloyd’s announced its full-year 2023 results today, the market’s CFO said he is happy with the uptake of the London Bridge 2 structure and hopes it will continue to expand.

“The more important benchmark is, if you look at new structures at Lloyd’s, I would say 90% to 95% of all new structures are using London Bridge, and I think that’s the right benchmark and then the rest will follow,” Keese explained.

Adding that, “It’s a bit like captives, we need to provide the platform, we need to provide the infrastructure. It will be used and market timing depends on the market.”

Which is notable, as it shows a shift in how capital wants to access the Lloyd’s market, with the London Bridge 2 platform offering what might be seen as a more efficient way for capital to flow in and access the market’s returns.

That was always one of the goals for the London Bridge 2 platform, so it’s encouraging to see its uptake.

On the target for 2024, Keese said, “If I look at my own target if I may, I want to deploy another billion.

“The appetite is there, but as I said in my presentation it was quite a difficult capital environment last year, where there are great underwriting conditions, but there is a fatigue of fresh capital flowing into the market.

“Once we have overcome this with appropriate performance and transparency, I think this is really achievable to add another billion for London Bridge 2 in the next year.”

Keese expects market conditions will remain attractive to capital in 2024, saying, “We don’t observe any signs that the market conditions will decline.”

Saying that, so far, “Despite the outstanding trading conditions only very limited fresh capital flowed into the market.”

In addition, Lloyd’s said today that London Bridge distributed “material” profits to investors in 2023, with around $50 million in capital delivered.

Also read:

– Lloyd’s: London Bridge ILS issuance hits $750m with Beazley’s debut nat cat bond.

– First London Bridge cat bond a valuable roadmap for Lloyd’s market: CFO Keese.