On the top floor of a building in Shanghai's prime Lujiazui area, Lloyd's of London's new office overlooks the city's dynamic financial hub.

Visitors can't ignore a glass wall with shining silver signatures on it - including that of the city's vice mayor and the head of the insurance regulator in Shanghai.

The world's insurer has set up its first subsidiary in its 320-year history here, and its chairman, Lord Levene of Portsoken, is in town to celebrate the city's emergence as a regional reinsurance center. "Look out of the window, it would be odd to not operate here," said Lord Levene.

Lloyd's is the world's leading specialist insurance market, home to 44 managing agents and 62 syndicates. Lloyd's is not an insurance company but a society of members, both corporate and individual, who underwrite in syndicates and on their behalf professional underwriters accept risk. Supporting capital is provided by investment institutions, specialist investors, international insurance companies and individuals.

But the decision to pick the office's site wasn't easy. While Shanghai is the country's financial center, Beijing, where Lloyd's opened a representative office in 2000, is the country's center of government, and still wields big financial clout thanks to the banks headquartered there.

Both city governments tried to woo Lloyd's. But the final decision went to Shanghai, as the city is "a little more of an insurance center," Lord Levene noted.

Richard Ward, chief executive officer of Lloyd's, said that the municipal government offered some measures to draw the group, but declined to disclose specific incentives such as tax policies.

The city government has ample reasons to entice the industry's mammoth player - Lloyd's premium income accounts for one percent of the total United Kingdom economy.