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UK regulators approve a second Lloyd’s Protected Cell Company building on the success of London Bridge Risk

03 Aug 2022

Lloyd’s today announced that it has received regulatory approval from the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) to set up a second Protected Cell Company (PCC), which provides a broadened range of capabilities for the market and an enhanced accessibility for investors; a key deliverable of the Future at Lloyd’s strategy.

Lloyd’s previously announced a number of successful deals through London Bridge Risk PCC (LBR) and is building on that success by sponsoring a second vehicle. The second London Bridge PCC (LB2) will offer a number of extensions in the coverages it can write and the way in which those obligations can be funded, together with improvements in the execution of these collateralised transactions.

LB2 will provide an access point for qualifying institutional investors, to deploy funds in a tax transparent way into the Lloyd’s market. Lloyd’s members and managing agents will be able to use the new vehicle to manage their capital and risk management requirements by attracting new sources of capital and reinsurance protection..

LB2 is authorised to undertake three additional capabilities:

  • 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.

Working closely with the PRA and FCA, Lloyd’s has developed a set of mandatory terms for the principal transaction documentation, that will provide greater commercial flexibility whilst maintaining regulatory compliance. This is embodied in a Scope of Permissions that enables new cells to be set up and reinsurance written without the need for 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. 

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“I am delighted that we are able to build on the success of our initial risk transformation vehicle to offer the market a new vehicle with broader capabilities, thus enabling market participants to have more options to attract capital markets investors to support their underwriting at Lloyd’s.

Both PCC vehicles will complement the more traditional approaches to deploying capital and managing risks at Lloyd’s, with LB2 offering an efficient route for institutional investors to support the growth and diversity of risks written in the market.”
Burkhard Keese - CFO, Lloyd’s

Notes to Editors

  1. As with LBR, Lloyd’s acted as the sponsor for the application to form the new PCC and again as LBR, this PCC will be owned by an Orphan Charitable Trust, providing an independently managed Transformer vehicle to the market, directly regulated by the PRA and FCA. LB2 will provide independent services to investors, Members and/ or Syndicates of Lloyd’s, depending on the nature of reinsurance written. Day-to-day management will be provided by Artex Capital Solutions, with overall responsibility for running the PCC resting with the Board of LB2 Ltd.
  2. LB2 Ltd Board is made up of three Directors: JB Cozet from Artex Capital Solutions as the CFO, Helena Whitaker from Intertrust Ltd as the CEO, and Ed Thomas from Lloyd’s, as the Chair.
  3. You can view the previous LBR announcements here: Launch of LBR, Ontario Teachers’ pension fund and Nephila Capital
  4. More news and information available from lloyds.com


Enquiries


UK: 

+44 (0) 20 7327 5111 | pressoffice@lloyds.com

+44 (0) 20 7327 5391 | annie.roberts@lloyds.com

+44 (0) 20 7327 6144 | bud.hedges@lloyds.com


Americas: 

+44 (0) 20 7327 6125 | nathan.skinner@lloyds.com


Europe: 

+44 (0) 20 7327 5721 | elliot.maule@lloyds.com 


APMEA:  

+65 6870 9227 | suganthy.selva@lloyds.com    


About Lloyd’s

Lloyd’s is the world’s leading marketplace for commercial, corporate and specialty risk solutions. Through the collective intelligence and expertise of the market’s underwriters and brokers, we’re sharing risk to create a braver world.

The Lloyd’s market offers the resources, capability, and insight to develop new and innovative products for customers in any industry, on any scale, in more than 200 territories.

We’re made up of more than 50 leading insurance companies, over 200 registered Lloyd’s brokers and a global network of over 4,000 local coverholders. Behind the Lloyd’s market is the Corporation: an independent organisation and regulator working to maintain the market's successful reputation and operation.

We’re working to build solutions for the most current and prevalent threats. As Chair of the Insurance Task Force for HRH The Prince of Wales’s Sustainable Markets Initiative, Lloyd’s is bringing the industry together to insure the transition to net zero. Our research community is pooling expertise from across the industry to provide cutting edge insight on systemic risks from climate change to cyber security.

And through our digital-led strategy, The Future at Lloyd’s, we’re making it easier and cheaper to place, price and process cover in the Lloyd’s market.


About Artex Capital Solutions

Artex is the world’s third largest insurance manager with 16+ global offices and license to operate in 30+ global domiciles. Artex serves over 1,500 customers across more than 1,000 captives, cells and programs. The Company exercises a best-of-both worlds approach, combining entrepreneurialism backed by a global Fortune 500 company and both are rooted in ethics and trust. Artex focuses on innovation and technology to solve the evolving needs of its clients and deliver the broadest solution set available.

Please see artexrisk.com for more details or email Meghann Dowd, Director Communications, Gallagher Meghann_Dowd@ajg.com for media inquiries.