The Lloyd’s of London building in the City of London is hard to miss. One of the few buildings in the world constructed with its elevators and ducts on the outside, it looks like a monument from outer space. Needless to say, it strikes a stark contrast to the centuries-old structures that line the adjoining streets.
As the office housing Britain’s oldest insurance agency, the walls at 1 Lime Street have had plenty of tales to tell about the country’s insurance and reinsurance market. Still, the gossip darting to and fro most recently has not been about the
350-year history connected to the building. That is because, by the time PERE goes to press, the British will no longer be the only insurers connected to the property.
Indeed, an insurance company from the other side of the world – China’s Ping An Insurance – is poised to buy the iconic building in its very first international real estate deal. Ping An currently has RMB 2.63 trillion (€330 billion; $428 billion) in assets under management, which is more than four times the $97 billion of assets housed by the Lloyd’s market.
In October, the China Insurance Regulatory Commission cleared Chinese insurers to invest in private equity and real estate assets internationally. While foreign fund managers have been toasting each other on the expectation of trillions of yuan suddenly becoming available for fundraising efforts, Chinese insurance companies actually have remained cautious. Even the mighty Ping An has not tackled its first real estate deal alone.
To take its first step outside of China in real estate, Ping An has employed the services of Downtown Properties, an affiliate company of Hong Kong-based private equity real estate firm Gaw Capital Partners. The deal, which is expected to complete imminently, also would be Gaw’s first direct partnership investment with a Chinese institution outside of China.
The property is reported to be costing Ping An approximately £260 million (€308 million; $399 million). Neither the seller – German fund manager Commerz Real – Ping An nor Gaw Capital would comment on the deal.
Intestines on the outside
While the site has a long and colorful history, the current building in which Lloyd’s of London now resides is itself barely a quarter century old. As the firm outgrew its older buildings, Lloyd’s ran an architectural contest with a view to building over the original 1928 structure. Attracting submissions from around the world, the insurance company finally decided on a design by Richard Rogers. The architect’s pitch was that, by having the building’s intestines including its elevators, stairs, pipes (even its toilets) on the outside, it could be more easily repaired and reconfigured. Further, it made for more room within the building.
When the design was first unveiled, it was criticized and mocked for being “ugly” and for shamelessly exposing all its functions. Regardless, after eight years construction, the building was opened by current British monarch Queen Elizabeth II in 1986. Despite its contemporary exterior, the 14-story building has retained a number of artifacts that trace back the history of Lloyd’s. The company began in the late 1680s as a marine insurance brokerage, with business conducted informally from a coffee shop on Towers Street. Lloyd’s still houses some of the letters of exchange between merchants active that day.
Further, the building’s classic archway entrance was preserved intact, even if dissidents describe it as an “incongruous attachment” to the 1986 structure. Lists of the World War I dead are inset on either side of it – a powerful reminder of the nearly 2,000 men and £300,000 that Lloyd’s committed to the war effort.
In the very heart of the building hangs the Lutine Bell, which has become almost synonymous with the Lloyd’s marketplace. Once part of a 1799 shipwreck that became one of Lloyd’s largest payouts – totalling £140,000 – the salvaged bell is said to embody the insurance market’s reputation as reliable and always fulfilling its obligations. It has hung in the firm’s various underwriting rooms since 1890.
The Lutine Bell traditionally was rung whenever ships were overdue or lost to ensure all interested underwriters received the news simultaneously. Now the ringing of the bell is generally limited to ceremonial occasions, with rare exceptions such as the terrorist attacks on September 11, 2001.
With a Chinese insurance company now staking a claim to the building, Lloyd’s has another important chapter to add to its already lengthy story. It will be the first time a Lloyd’s building will be owned by a non-European entity or person. British architectural purists might lament the loss of yet another prime London office falling into foreign hands, but few would see cause to mark the event by striking its famous bell once again.