Aon and Warren Buffett’s Berkshire Hathaway announced in March that they had negotiated the establishment of a “sidecar” facility to operate at Lloyd’s. The deal, which had been in the works for some time, benefits both parties. There are questions being raised, however, as to whether it benefits Lloyd’s.

Executive Summary

A Lloyd's sidecar facility set up by Aon and Berkshire Hathaway benefits both parties—but does it benefit Lloyd's? Insurance Journal's International Editor Charlie Boyle asks the question in a special report he filed for Carrier Management.

Under the agreement, Aon, which originates around 23 percent of all Lloyd’s business, will cede 7.5 percent of the premiums it receives on Lloyd’s business to Berkshire, which in turn will assume that portion of the insured risk. Berkshire will also pay Aon a commission, the amount of which hasn’t been disclosed.

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