Often referred to as the Chain of Security, the capital structure provides the financial strength that ultimately backs all insurance policies written at Lloyd’s and the common security that underpins the market’s strong ratings and global licence network.
Lloyd’s unique capital structure provides excellent financial security to policyholders and capital efficiency for members
Callable Layer (gross)
Figures as at 31 December 2022
Lloyd’s capital structure has three elements
Members’ working capital
All premiums received by syndicates are held in trust by the managing agents as the first resource for paying policyholders’ claims and to fund regulatory deposits. Until all liabilities have been provided for, no profits can be released. Every year, each syndicate’s reserves for future liabilities are independently audited and receive an actuarial review.
Funds at Lloyd’s
Members’ capital deposited at Lloyd’s
Each member, whether corporate or individual, must provide sufficient capital to support their underwriting at Lloyd’s. Managing agents are required to assess the Solvency Capital Requirement (SCR) for each syndicate that they manage.This sets out how much capital the syndicate requires to cover its underlying business risks at a 99.5% confidence level. In light of Lloyd’s mix of business, it is important that this assessment goes beyond the 12 month horizon required by Solvency II and must cover the risk of such extreme losses until all liabilities are paid and extend to an ultimate basis.The Corporation reviews each syndicate’s SCR to assess the adequacy of the proposed capital level. When agreed, each SCR is then ‘uplifted’ to ensure there is sufficient capital to support Lloyd’s ratings and financial strength. The uplift applied for 2017 is 35%. This uplifted SCR is known as the syndicate’s Economic Capital Assessment and drives members’ capital levels across all of the syndicates in which they participate in proportion to their share of those syndicates. Each member’s capital is held in trust by the Corporation for the benefit of policyholders but is not available for the liabilities of other members
Lloyd’s central assets, which include the Central Fund, are available, at the discretion of the Council of Lloyd’s, to meet any valid claim that cannot be met from the resources of any member. Should syndicates need additional assets to meet their liabilities, the funds at Lloyd’s ensure that members have additional resources available. In the rare event that a member’s capital is insufficient and that member is not able to provide further assets to the relevant syndicates, Lloyd’s central capital provides further financial support to ensure valid claims are paid. The Corporation calculates the central Solvency Capital Requirement, which is independently validated and overseen by the PRA. Council sets the level of economic capital needed above the regulatory minimum to meet its risk appetite and support the market’s ratings and global licence network.
Please contact us for more information.
We are providing the information in this section for background information only. We are not providing access to this section for the purpose of soliciting: (a) membership in Lloyd’s or membership of any syndicate of Lloyd’s, (b) the purchase of any security issued by Lloyd’s, or (c) the purchase of insurance, or any other service or product, in the Lloyd’s market. This section does not make an offer of, or solicit an offer for, any of these things.
Third parties, such as Lloyd’s syndicates, have provided some of the information on this web site and Lloyd’s has not verified its accuracy and completeness. More generally, we do not accept responsibility for loss by any person acting or refraining from action as a result of any statement, fact, figure or expression of belief (including any forward looking statement) contained on this web site.
You must not distribute the information on this web site to, or cause it to be used by, any person or entity in a place where its distribution or use would be unlawful.
You confirm that (i) you acknowledge and agree to the paragraphs above and (ii) your access to this information is not deemed to be an offer or solicitation of an offer under the laws of your local jurisdiction. You also agree that you will not provide any person with this information without providing them with a copy of this acknowledgment and agreement, by which they will also be bound.