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Capital structure

Lloyd’s unique capital structure provides excellent financial security to policyholders and capital efficiency for members

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.


First Link


Second Link


Central Fund


Callable Layer (gross)




Subordinated debt/securities

Figures as at 31 December 2022

Lloyd’s capital structure has three elements

First link

Syndicate assets

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.

Second link

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

Third link

Central assets

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.

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