This second PCC will build upon the already successful London Bridge Risk PCC (LBR) and will offer numerous extensions in the coverage it can write and the way in which those obligations can be funded, alongside an improved execution of collateralised transactions.
Lloyd’s second PCC (LB2) will provide an access point for qualifying institutional investors to deploy funds in a tax transparent way within the Lloyd’s market. Lloyd’s members and managing agents will be able to use LB2 to manage their capital and risk management requirements by attracting new sources of capital and reinsurance protection.
LB2 is also authorised for three additional capacities:
For a Corporate Member, in addition to writing quota share reinsurance, it will also be able to write excess of loss coverages.
For a syndicate, it will be able to provide collateralised reinsurance, on both an excess of loss and quota share basis.
For all structures it will be able to fund the reinsurance obligation through the offer, by the segregated cells of the PCC, of either preference share or debt securities.
Lloyd’s of London has also developed a set of mandatory terms for the principal transaction documentation alongside th PRA and FCA. These will provide greater commercial flexibility while maintaining regulatory compliance. This will be conducted through a Scope of Permissions that enables new cells to be set up and reinsurance written without any additional regulatory approval – providing these permissions are complied with.
The insurance management services for LB2 will be provided by Artex Capital Solutions, who are the market leaders in the management of ILS vehicles and operate across multiple jurisdictions.
