UK Regulators Approve Lloyd’s Special Purpose Vehicle to Attract New Forms of Capital

January 14, 2021

Lloyd’s announced it has received regulatory approval to set up a new multi-insurance special purpose vehicle, which aims to attract new forms of capital.

A key milestone for the Future at Lloyd’s strategy, the new platform will make it easier for investors to access the Lloyd’s market and will benefit investors by offering a more transparent and efficient capital management process.

Using the UK’s Protected Cell Company (PCC) legislation, Lloyd’s has sponsored the creation of an independently owned and managed UK protected cell company (PCC), London Bridge Risk PCC Ltd.

The PCC will provide an access point for both UK and international investors, including insurance-linked securities (ILS) investors, to deploy funds in a tax transparent way into the Lloyd’s market.

Lloyd’s members will be able to use the new vehicle to manage their capital requirements by attracting new classes of investors such as pension funds and will benefit from reduced set-up times and lower transactional costs.

In addition, standardized documentation and processes have been developed, designed to make the process quicker, more tax transparent and to streamline the approach to regulatory approval for investors.

As long as new individual proposals utilize the standard documentation and stay within the regulatory “Scope of Permissions,” it will be a simple notification process for each deal, removing the need for costly, and often lengthy, individual applications.

The new vehicle complements the more traditional approaches to deploying capital at Lloyd’s by providing additional optionality.
London Bridge Risk PCC Ltd.’s insurance management services will be provided by Horseshoe, which specializes in the management of ILS vehicles and operate across multiple jurisdictions.

“As part of the Future at Lloyd’s strategy, we continue to look at all ways we can make it easier and more efficient to deploy and manage capital at Lloyd’s,” commented Burkhard Keese, CFO, Lloyd’s.

“Through our sponsorship of the London Bridge Risk PCC, we will give investors the option of a new tax transparent way to participate in the market with standardized documents and a much simpler repeatable process,” he added.

“ILS investment is not new to Lloyd’s, but this is the first time that a UK PCC has been set up as a platform to allow investors to back and provide capital to members at Lloyd’s. We look forward to working with investors and Lloyd’s Members who wish to use this new PCC to structure their participation at Lloyd’s.”

The multi-insurance special purpose vehicle received regulatory approval from the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA).

Source: Lloyd’s

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