Research released by Christopher Hitchings, KBW analyst, suggests it is true the “only realistic” way of getting into the market is via acquisition of an existing Lloyd's insurer, but “those who might want to enter Lloyd's are already here.”

So there is no incentive to take advantage of the markers (low prices and the recent difficulty of starting a new syndicate), which arguably make a better case for acquisitions of existing Lloyd's businesses now than in 2007-2008, Mr. Hitchings said.

“There may be some smaller Lloyd's players to merge but cash deals at large premiums will be hard to get through,” Mr. Hitchings said in the report.

The analyst added that merging does not save in costs “because you don't get the potential synergy” due to the structure of Lloyd's.

“You're not getting rid of a building or a claims department,” Mr. Hitchings said, since Lloyd's rents out to independent traders that supply capital. Also, as Mr. Hitchings wrote in his report, “the vast bulk of the potential synergies comprise the salaries of those undertaking the discussions, which is rarely a fruitful basis.”

Though Lloyd's may look attractive to newcomers, Tom Bolt, Lloyd's director of market performance, said companies need to demonstrate they “bring something to the party.”

“The benefits to the people coming in are pretty clear,” Mr. Bolt said. “The benefits to the franchise are not always clear and in a softening cycle such as the one we're in, it has to be even more demonstrably clear given the pressures on business plans. If you have an existing book of business that's different and brings something new to Lloyd's then there's something to talk about.”

On pricing, Mr. Hitchings of KBW said he sees a recovery during 2012 but “no one has enough pain at the moment.” The market remains soft and industry results are “massively weaker” but conditions will remain the same until insurers begin “losing rate at a scale that scares them.”

Lloyd's companies have a long history dealing with difficult times, Mr. Hitchings said, and they have excellent records of doing well by shrinking when the market is down.

Mr. Bolt noted that “smarter underwriters will be managing their books down.” During the soft cycle from 1998 to 2001, top syndicates reduced their participation in the market and then wrote more in the “boom years” following Sept. 11.

There has not yet been an event – something in the $80 billion to $100 billion range – to move the market, but it is “getting to the point where rates can't go any lower,” Mr. Swift of Willis observed.

Lloyd's companies have more international books. There have been catastrophes, like the Chilean earthquake, but from a rate perspective, increases are only occurring where there is a direct loss. Anywhere outside these areas remains the status quo, Mr. Swift observed.

Tim Breedon, chairman of the Association of British Insurers, said 2011 represents a year to prepare for 2012.

“This will be the most significant single year in living memory,” he wrote of 2012 in a local London newspaper. Mr. Breedon, also the group chief executive of Legal & General, pointed to the London Olympics, the Queen's Diamond Jubilee to mark the 60th anniversary of the accession of Queen Elizabeth II to the throne and the culmination of reforms in 2012 as other events of note.

“By the end of 2011, U.K. insurers will need to be ready for a new European capital regime under Solvency II” and “a dramatically altered regulatory structure in the U.K. and Europe,” Mr. Breedon wrote.

In outlining the strategy of Lloyd's for the next several years, chief executive officer Richard Ward said Solvency II is “the biggest regulatory change for a generation” and called it a test, but he said it will “strengthen the foundations of the market.”

Mr. Ward also emphasized disciplined underwriting, as catastrophes have not led to rate increases and returns on investments are hard to come by.