Transactions permitted in the fourth auction under Auction Rule 4

Transactions generally permitted

Following the approval by Lloyd’s during October 2008 of the relevant syndicate business plans for 2009, it has been determined that transactions will be permitted in the fourth auction to be held on 13 and 14 November 2008 in capacity on the following syndicates:

Managing agent/syndicate(s)

Hiscox Syndicates Limited - 33
Equity Syndicate Management Limited - 218
KGM Underwriting Agencies Limited - 260
Beaufort Underwriting Agency Limited - 318
R J Kiln & Co. Limited - 510
R J Kiln & Co. Limited - 557
Atrium Underwriters Limited - 609
Beazley Furlonge Limited - 623
Omega Underwriting Agents Limited - 958
Heritage Managing Agency Limited - 1200
Novae Syndicates Limited - 2007
Cathedral Underwriting Limited - 2010
Argenta Syndicate Management Limited - 2121

In the majority of the cases listed above, the syndicate business plan approved by Lloyd’s contained a material change, as defined in paragraphs 4(3) and 4(4) of the Auction Rules 2008 (“the Auction Rules”), from the equivalent information communicated to members’ agents and direct corporate members on or before 19 September 2008 or there has been a material increase to the indicative risk based capital ratio for the syndicate.

· In the case of syndicates 218, 260, 557, 623, 958, and 2010 there has been a material change, as defined in paragraph 4(3)(c)(i) of the Auction Rules, in their indicative risk based capital ratios;

· In the case of syndicates 33 and 2121 there has been a material change, as defined in paragraph 4(4)(b)(v) of the Auction Rules, between the amount of gross premiums written for a source of business in the syndicate’s approved business plan and the disseminated syndicate business forecast for the 2009 year of account;

· In the case of syndicates 33, 510, 609, 623, 1200 and 2121 there have been disposals of capacity where the capacity of the syndicate for the 2009 year of account, as shown in the syndicate’s approved business plan, exceeds the amount indicated in the syndicate’s business forecast pursuant to paragraph 4(3)(a) of the Auction Rules;

· In the case of syndicate 958, there has been a material change, as defined in paragraph 4(4)(b)(iv) of the Auction Rules, in the utilisation of capacity between the syndicate’s approved business plan and the disseminated syndicate business forecast for the 2009 year of account;

· In the case of syndicates 623 and 1200 there has been a change in the active underwriter as defined in paragraph 4(4)(b)(i) of the Auction Rules; and

· It has also been agreed that transactions will be permitted in the fourth auction in capacity on syndicates 318 and 2007.

Members and prospective members of the above syndicates are permitted to tender any or all of their capacity on those syndicates in the fourth auction except for syndicates 510 and 609, which are solely in the fourth auction because they have met the criteria set out in paragraph 4(3)(a) of the Auction Rules, where only the capacity that represents the difference between the amount shown in the syndicate’s business forecast and the syndicate’s approved business plan (referred to as “excess entitlement”) will be eligible to be bought and sold in the fourth auction. Disposals of such capacity by a syndicate member are limited to the member’s share of that excess entitlement.

In the context of any proposed transaction in the fourth auction in capacity on the syndicates listed above, members, their advisers and issuers are reminded that Auction Rules 7(4)(b) and (c), which generally prohibit members from tendering and subscribing for capacity on the same syndicate in the same year, will not apply to members.

Other permitted transactions

Details of any other transactions which will be permitted in the fourth auction, including those undertaken to rectify administrative errors or involving the capacity of members who have died on or after 1 September 2008, will be set out in a subsequent auction newsletter.

Disclosures

The deadline for disclosures for the fourth auction is the close of business on 10th November. Each managing agent is expected to give very careful consideration as to whether it is appropriate to issue a disclosure where there has been a material change after the third auction to the business plan of the syndicate it manages and which is a syndicate included in the above list.

Peter Spires
Auction Official

04 November 2008

Contact Information:
Telephone: +44 (0)20 7327 6170
Email: peter.spires@lloyds.com