London-listed SPAC launches Lloyd’s of London investment vehicle

A special purpose acquisition company has launched a new listed business providing investors access to the Lloyd’s of London Insurance market. 

Financials Acquisition revealed it had set up London Innovation Underwriters (LIU), with which it intends to merge in order to raise significant amounts of capital via a listing on the UK capital’s stock exchange.

It believes the combination would create an ‘efficient vehicle’ enabling investors to build exposure to the market without needing to fork out goodwill payments or create additional fee structures.

Fined: Financials Acquisition revealed it had set up London Innovation Underwriters (LIU), a vehicle intended to give investors to access the Lloyd’s of London insurance market

LIU plans to access the Lloyd’s insurance marketplace through London Bridge 2, a platform that makes it easier for participants to deal with insurance-linked securities investors.

Financials said it expects LIU to have enough capital to support up to £1billion of capacity upon completion of the merger.

SPACs are blank-check firms formed specifically to raise capital through an initial public offering with the intention of buying another company.

They boomed during the height of the Covid-19 pandemic, especially in the US, as businesses sought a way to go public in a faster and cheaper way.

However, their popularity began to plunge in 2022 following a spate of high-profile bankruptcies, as well as rising interest rates and economic uncertainty.

Will Allen, chief executive and co-founder of Financials Acquisition, said: ‘We believe LIU will offer a unique opportunity for investors to gain efficient access and diversified exposure to the Lloyd’s market with liquidity.

‘We are pleased with the initial reaction we have received from both investors and underwriters and look forward to the next stage of the transaction.’

Allen, an ex-managing director of investment bank KBW, set up Financials last year with former Munich Re executive Andy Rear through a partnership vehicle called Finsac.

Financials’ announcement comes a day after Lloyd’s declared a pre-tax profit of £3.9billion for the first six months of 2023, having made a £1.8billion loss in the same period last year.

Earnings were driven by solid investment returns and underwriting profits more than doubling to £2.5billion, thanks to a decline in large loss events.

Gross written premiums jumped by 22 per cent to £29.3billion due to rising prices and growth from both new and existing syndicates.

John O’Neal, chief executive of Lloyd’s, said the results ‘show we are now driving consistent improvement in profitability and an ability to grow sustainably. This performance puts us in a strong position for the second half of the year.’