Lloyd’s vehicle for new capital gains approval

Lloyd’s recently announced that regulators had approved the insurance market’s special purpose vehicle as part of its future strategy, which aims to create an insurance market that attracts new forms of capital. 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 Limited.

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, standardised 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. Provided new individual proposals utilise the standard documentation and stay within the regulators ‘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 Limited’s insurance management services will be provided by Horseshoe, who specialise in the management of ILS vehicles and operate across multiple jurisdictions.