Brit has launched a fresh source of funding for marine and other speciality insurance lines at the Lloyd’s of London market.

Bermuda-registered Brit has set up the first insurance-linked securities fund — the Sussex Specialty Insurance Fund — to source capital from ­institutional investors to back its Lloyd’s Syndicate 2988.

The speciality insurer and reinsurer acts as managing agent for Syndicate 2988, drawing in capital to back its activities across a wide range of speciality lines.

Diverse range

The idea is that investors will ­provide capital to back a diverse range of cover provided by Brit, ­including marine insurance.

Syndicate 2988 earned £106m ($139m) in gross premiums last year, with £8.4m coming from its ­marine lines, including cargo, hull and machinery, and marine lia­bility.

It has been trading at a loss since being set up by Brit in 2016, losing £22.1m last year, and £21.4m the previous year.

However, it has increased capa­city year on year from £55m in its first year and has been approved to write £200m-worth of business in 2020.

Lloyd’s chief executive John Neal has been encouraging syndicates and their managers to find innovative sources of finance in its forward-looking business plan, titled The Future.

“This is exactly the type of ­initiative that Lloyd’s is eager to support,” he said. “It is encouraging to see Brit working with us and playing an active part in The ­Future at Lloyd’s as we look to make it easier and simpler for new sources of capital to enter the market and attach to risk.

“It is the first time alternative capital will be able to access Lloyd’s in this way and is another demonstration of Brit’s commitment to being truly innovative.”

The expectation is that more speciality insurers could follow Brit with similar funding schemes.

‘Compelling proposition’

Brit chief executive Matthew ­Wilson said: “We believe that we have designed a compelling proposition for institutional investors, giving them access to Lloyd’s risks underwritten by our market-­leading teams that are closely aligned to our own book.”

However, some observers point out that a soft insurance market and consecutive years of losses in the Lloyd’s of London market have been caused by an excess of capital rather than a shortage.