International hedge funds and private equity firms increasingly invest in a tax-free investment vehicle from Lloyd’s of London as the traditional British insurance company expands its circle of investors.

The program introduced in 2021 aims to benefit from the growing market for Insurance-Linked Securities (ILS), which, according to Aon, grew to 113 billion USD last year. The second phase of the "London Bridge" program doubled in 2024 compared to the previous year, reaching a volume of 1.9 billion USD. Alternative asset managers are showing a growing interest in the platform.

Although the program's share of Lloyd’s overall business, with $70 billion in underwritten premiums, is comparatively small, CFO Burkhard Keese sees it as an important step in regaining competitiveness. The tax advantage of the program, which exempts investors from corporate and withholding taxes, is particularly attractive—a benefit that traditional syndicate members do not enjoy.

Notable investors include the US investment manager Blackstone and the Ontario Teachers' Pension Plan. Through the program, Blackstone gains direct access to specialized risks, ranging from oil tankers to insurance policies for professional athletes.

A key feature of the program is the financing of reinsurance contracts through catastrophe bonds (Cat Bonds). These bonds, which protect insurers from natural disasters, offer investors the opportunity to profit from risks that are less correlated with traditional financial markets. With a volume of 46 billion dollars, Cat Bonds accounted for nearly half of the entire ILS market, according to Aon.

Critics in the past have criticized the slow regulatory approval in the UK, which put London at a disadvantage compared to competitors like Bermuda. However, the platform, managed by Artex Capital Solutions, enables a simplified regulatory structure and tax benefits through so-called "cells" that are exempt from corporate and withholding taxes.

Despite Growing Interest, Some Long-standing Lloyd's Members Continue to Adhere to Alternative ILS Locations. A Traditional Insurance Company Active in Lloyd's for Over a Century Sees No Compelling Reason to Move Its Business from Bermuda to London.