How retail investors can gain exposure to Lloyd’s of London

The Lloyd’s of London insurance market is one of the City of London’s most interesting entities. Based at its iconic headquarters in the centre of the City, it’s often just referred to as Lloyd’s, and sits at the heart of the UK and indeed global insurance market. Lloyd’s isn’t an insurer itself. Instead, it’s an organisation that brings together all the parties in the market under one roof – the brokers, underwriters, capital providers and support staff. The Corporation of Lloyd’s regulates this market and its stakeholders.

Over the last five years, this market has become increasingly profitable. The prices paid by insurance buyers, known as premiums, have in some cases more than doubled. While losses from major events such as hurricanes have also increased dramatically, companies have tightened their standards, only writing business they expect to be profitable. As a result, the combined ratio of the Lloyd’s market has held comfortably below 90% (anything below 100% signals a profit, while anything above signals a loss). The combined ratio of Lloyd’s was 86.9% in 2024, up from 84% in 2023. It fell to 79.1% in the first quarter of 2025.

What’s interesting is that, to some extent, the market is still inefficient. Some of the unique policies written in the market (such as that covering Tom Jones’s chest hair) have no alternative market. That means underwriters can often earn super-normal profits.

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How to gain exposure to Lloyd's of London

Throughout much of its history, the capital used to back insurance policies underwritten by Lloyd’s was provided by wealthy individuals known as Names. Over the past few decades, as the sums involved have grown, Names have largely been replaced by corporate entities – the likes of Beazley (LSE: BEZ) and Hiscox (LSE: HSX) – but a small percentage of capital (around 8%) is still provided by smaller investors, often via so-called Limited Liability Vehicles (LLVs).

In theory, anyone can invest directly into the market, although Lloyd’s used to recommend a minimum of £350,000, and investors are advised to deploy no more than 10% of their assets into the market. In practice, anything less than £1 million isn’t going to be worth the cost, ruling out all but the wealthiest investors.

But there are other options to invest directly in this unique and highly lucrative market. Beazley and Hiscox both have some exposure to Lloyd’s, and Aim-listed Helios Underwriting (LSE: HUW) owns a portfolio of LLVs, mostly acquired from former Names active in the market. It’s one of the only ways smaller investors can buy direct exposure to Lloyd’s business.

Another way to buy into Lloyd's of London

A private-market alternative is Talisman Underwriting. Initially set up in the 1990s as a private company to allow Names to move their Lloyd’s exposure into a limited company, the business underwrote £48 million of capacity on Lloyd’s syndicates in 2025 (syndicates are similar to individual companies, which pool capital and resources to underwrite more business and achieve economies of scale).

Today, the company is open to new investors who want to invest in Lloyd’s, but don’t have the funds or perhaps the time to invest directly. As David Monksfield, who became a director of Talisman at its inception in 1997 and is responsible for the day-to-day running of the company, explains, the firm has exposure to 14 Lloyd’s underwriting syndicates offering diversification across businesses that are not otherwise available. Unlike traditional ways to invest in the market, investors can “get involved buying shares for cash as [they would with] any other company, with each share priced on net asset value”. Income is also paid out annually as a dividend, circumventing the age-old three-year accounting cycle that has historically been a feature of the Lloyd’s of London market for individual investors.

Lloyd's of London profits

In the past few years, the company, just like the broader market, has experienced explosive growth. “The 2022 result is 12.4% of capacity, and the current forecast for 2023 is a mid-point of 16.9% of capacity,” says Monksfield, referring to the standard metric of profitability for Lloyd’s, a profit given as a percentage of total underwriting capacity written. This excludes the contribution from so-called Funds at Lloyd’s, the capital used to support underwriting activity. Talisman focuses on risk reduction above all else and, to that end, owns mainly cash with a percentage of the portfolio managed by Ruffer. “Talisman has a focus on the downside and does not want a volatile investment portfolio that could go down in value just at the wrong time,” says Monksfield.

When it comes to the firm’s portfolio of syndicates underwriting business in the Lloyd’s market, Talisman focuses on seven core holdings, which Monksfield says have “excellent management and underwriting skills”. “These are businesses that know how to manage the cycle and, through normal trading conditions, should provide profits throughout the cycle,” he adds. “We have no intention of changing the policy that we have and that has led Talisman to exceed the Lloyd’s market average performance for most of the years it has been in existence since 1998.”

Talisman pays its investors with dividends, twice a year, from any profit earned from underwriting activity. As shares in the limited company are also tradeable (although highly illiquid), investors can also profit from any potential upside generated from asset-value growth. If the shares are owned for two years, they qualify for inheritance-tax business relief. While the company is set up and designed to help individuals build exposure to the Lloyd’s market without having millions to invest, the minimum investment is set at £100,000, a significant sum, but substantially less than the millions required to enter Lloyd’s individually. Crucially, the limited company structure also provides investors with a layer of limited liability.

Talisman isn’t going to be suitable for most investors, but as a way to buy into Lloyd’s it’s an interesting option for those investors with sufficient capital and the desire to take on such an investment.

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