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Lloyd’s syndicate is first to tap market

Catastrophe bonds

Lloyd's of London and catastrophe go hand in hand. So much so that members of the London insurance market could be forgiven for feeling that Lloyd's has been nothing but a catastrophe in recent years.

The Lloyd's building:
The market's syndicates
are familiar with catastrophe

But the link with catastrophe took a new twist in April when Hiscox - one of the market's largest and best regarded underwriters - became the first Lloyd's syndicate to tap the insurance securitization market, placing $33 million of catastrophe risk-linked bonds via Aon Capital Markets.

The transaction had its origins months ago when Lloyd's and Goldman Sachs got together to discuss the possibility of a multi-syndicate catastrophe securitization.

This proved unworkable since it was difficult to align the needs of different syndicates. Goldman lost interest, Aon's investment banking subsidiary stepped in and Hiscox decided to go it alone.

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