Blackstone’s plans to set up a new insurance vehicle at Lloyd’s of London sparked a firestorm when they leaked this month during the industry’s annual conference in Monte Carlo. The New York asset manager has held talks with Aon, the world’s largest reinsurance broker, about creating a syndicate that could allow it to earn returns on up to $2bn of premiums annually. The $1.3tn asset manager already backs policies written by insurers at Lloyd’s, including AIG.

Blackstone’s latest plans are modelled after a controversial structure: the so-called broker facility. Under the terms being discussed, Aon would direct a percentage of the reinsurance business it brings in from commercial clients to Blackstone’s syndicate. The structure would be backed by private equity funds, such as Blackstone Private Equity Strategies (BXPE) or the firm’s flexible “tactical opportunities” strategy, and would target returns in the mid-teens.

Blackstone said: “All our Lloyd’s investments will continue to be made within the established Lloyd’s approval and oversight frameworks, alongside existing established market participants.” Aon said that its clients “expect our firm to develop . . . solutions that consider all forms of available capital”. Critics pointed out that insurers and actuaries were conspicuously absent from Blackstone’s planned structure, and the syndicate would likely rely on claims-handling services provided by a third party.