The investment case for buying into a listed Lloyd’s of London insurer used to be straightforward. Consolidation, albeit glacial, was ensuring that they were a dying breed, so there was a reasonable chance that the underwriter you chose would be next on the list.
Moreover, the large amounts of capital that these companies must set aside to cover potential historical claims is almost never needed in full. That subsequently freed-up money, combined with the impressive amounts of cash that insurers accrue from selling policy premiums, meant that every few years or so a special dividend payout would arrive to keep the wolf from the door.
That’s not the case now. Mergers and acquisition activity among quoted underwriters has seized up; their market is heaving with