Charles Taylor Managing Agency Limited
Managing Agent Name: Charles Taylor Managing Agency Limited (“CTMA”)
Subject: Auction Disclosure
Syndicate Affected: Syndicate 1884
This statement has been prepared by Charles Taylor Managing Agency Limited (“CTMA”) for the purpose of disclosing to existing and prospective underwriting members of Syndicate 1884 (“the Syndicate”) information which may be of relevance to such members in considering their participation for the 2018 year of account (“YOA”).
Members are referred to the Business Plan Narrative for the YOA, other SBF documents and the Syndicate’s latest quarterly returns, all of which have either been provided or are available to members (or their representatives as appropriate) and include information on various relevant developments within the Syndicate.
2018 Syndicate Business Plan and Capital Requirements
The 2018 Syndicate Business Plan and capital requirements for syndicate 1884 have been approved by Lloyd’s.
The Standard Club Ltd (the majority capital provider to syndicate 1884) has confirmed its firm commitment to provide capital support to syndicate 1884 for the 2018 year of account based on the agreed 2018 Syndicate Business Plan with Lloyd’s.
Last week a major loss estimate was submitted to Lloyd’s for Maria, as well as updated estimates for Harvey and Irma. In summary, the syndicate’s best estimates of these major losses (75% confidence) have not been increased from those numbers shared with capital providers on 5 October 2017.
Significant Syndicate Staffing Changes
Steven Robson (previously Group Head of Claims at Brit Syndicates Ltd) was appointed as Syndicate 1884 Managing Director from 1 September 2017. Ian Smith (previously at Navigators) has joined Syndicate 1884 as hull class underwriter from 3 October 2017.
Changes in senior management at CTMA
Yvonne Lancaster (formerly Chief Risk Officer at Asta Managing Agency Ltd) has been appointed as Chief Executive Officer (interim) and Sarbjit Singh Sihota (previously Syndicate Financial Controller at CTMA) as Finance Director (interim). Nigel Finlay (formerly Chief Actuary at Faraday Underwriting Ltd) will join CTMA as Chief Actuary in November 2017.
Lloyd’s has expressed its view that CTMA does not meet Lloyd’s Governance Minimum Standards (MS3).
Additional fees and terms to note are as follows:
- No profit commission will be payable by freehold members who became members of the Syndicate for the 2015 YOA (“Original Members”) until the losses which are made in the YOAs up to the first YOA in which a profit is made have been absorbed
- Capacity Fee - an additional fee of 1.00% of capacity for the 2015 to 2019 years of account (inclusive). For Original Members, this Capacity fee will be waived for the 2015 YOA and will be discounted to 0.7% for the 2016 to 2019 YOAs (inclusive);
- The Capacity Fee will not be included in the profit commission calculation for all members
Commercial terms differ between members participating on a limited tenancy basis and other members of the Syndicate. Members’ agents are familiar with these terms in full, and a summary version of them is available to all current and prospective members.
The following items, which are consistent with disclosures made in respect of the 2015, 2016 and 2017 YOAs, remain applicable for the 2018 YOA.
Several disclosures have been made to all members, or their representatives as appropriate, who participate on the Syndicate (and any new members acquiring capacity in the auctions or otherwise) which have been duly accepted:
- CTMA has been established with the strategic objective of providing third party managing agency services to persons who wish to establish Lloyd’s syndicates and accordingly CTMA may promote or manage other syndicates, including special purpose syndicates and/or syndicates which underwrite business of a similar nature and/or in the same classes and/or from the same or similar sources to the business underwritten or from time to time proposed to be underwritten from time to time by the Syndicate;
- CTMA benefits from and receives services from entities in both the Charles Taylor Group and Standard Club Group. These services are provided on an arm’s length and commercial terms and accordingly the Charles Taylor Group and Standard Club Group will derive profits from providing those services;
- Members of the Charles Taylor Group and the Standard Club Group are engaged and will continue to be engaged in various insurance businesses, including the provision of underwriting management, claims and other insurance services to businesses which may compete with CTMA and/or with the business of the Syndicate;
- Members of the Charles Taylor Group and the Standard Club Group will continue to develop their existing businesses. This may include the acquisition, formation or management of insurance underwriting businesses which accept business from the same sources or which write business in the same classes as the Syndicate or which may underwrite business which could be underwritten by the Syndicate;
- The existence of differences in commercial terms between “freehold capacity” and limited tenancy members. Certain 1884 Members participate on a “limited tenancy” basis, whereby CTMA may terminate their membership on certain terms and those members may not sell their capacity. Variations in terms will be stated in the Syndicate’s entry in the Lloyd’s Register of Charges
Argenta, Hampden and Alpha (collectively the “Members’ Agents”) have each signed, on behalf of all members for whom they act and who are or will become members of the Syndicate (the “1884 Members”), a letter in which they agree on behalf of the 1884 Members that:
- 1884 Members consent to CTMA establishing and managing new syndicates at Lloyd’s as referred to in disclosure 1 above and agree that CTMA (i) shall not be in breach of its contractual or common law duties to 1884 Members as a result of managing such syndicates (ii) shall have no obligation to invite 1884 Members to participate on any such new syndicate or (iii) shall have no obligation to obtain any further consent from 1884 Members in order to establish or manage any such syndicate.
- 1884 Members agree that CTMA shall have no obligation to seek competitive tenders from other entities which provide similar services to those referred to in disclosure 2 above. 1884 Members consent to the Charles Taylor Group and Standard Club Group earning and retaining any profits they derive from providing such services, provided that they are derived on arm’s length terms.
- 1884 Members consent to members of the Charles Taylor Group and the Standard Club Group continuing to carrying on the businesses referred to in disclosure 3 above.
- 1884 Members agree that CTMA shall not be in breach of its contractual or common law duties to 1884 Members as a result of members of the Charles Taylor Group and/or the Standard Club Group developing their businesses as described in disclosure 4 above, provided that CTMA does not transfer or re-direct the renewal or extension of insurance business previously underwritten by the Syndicate to a company in either the Charles Taylor Group or the Standard Club Group, or one of their managed clients.”
In addition, the Members’ Agents have each signed a letter in which they agree:
- To negotiate with CTMA in good faith to agree a fair and reasonable price at which the 1884 Members will be asked to surrender (or make a participation nomination or a second nomination in respect of) the whole or part of their prospective participations in relation to the Syndicate, and to recommend that the 1884 Members do so, when a bona fide offer has been made (on arm’s length terms in accordance with the applicable provisions of the Major Syndicate Transactions Byelaw and the Capacity Offer Rules (as that Byelaw and those Rules, or any replacement of them) are in force at the applicable time)) to acquire the remaining freehold capacity, which is defined as being less than 10% of the capacity held by 1884 Members (other than (i) corporate members who are members of the Charles Taylor Group or the Standard Club Group; or (ii) members who are not participating on terms of the standard managing agent’s agreement, that is on a ‘limited tenancy’ basis)
- If both CTMA and the Members’ Agents are unable to agree the terms of (a) and if CTMA wishes to proceed with the relevant offer, then the Members’ Agents and CTMA shall jointly obtain a valuation of members’ prospective participations in the Syndicate from an independent valuer with appropriate experience in valuing Lloyd’s syndicate capacity in order to determine a fair and reasonable price at which the Members’ Agents will recommend the 1884 members accept the relevant offer. Further, that CTMAL shall in its absolute discretion be entitled to decide whether or not to proceed with any offer at the price so agreed or determined.
- To support and recommend to the 1884 Members that they consent to, or vote in favour of, increasing the Syndicate’s capacity by more than 7.5% (or such other threshold as Lloyd’s may from time to time prescribe) from the previous YOA, and not make any representations to Lloyd’s or 1884 Members that would persuade them to vote, or consent, otherwise.
1884 Members means the members of Lloyd’s for whom the Members’ Agents act (whether now or at any time in the future) and who are now or who at any time in the future become members of Syndicate 1884.
Capacity has the same meaning as prospective participation.
Charles Taylor Group means Charles Taylor plc (Company number 03194476) and each company which is for the time being (whether on or after the date of this letter) a Related Company of Charles Taylor plc.
Standard Club Group means The Standard Club Ltd and each company which is for the time being (whether on or after the date of this letter) a Related Company of The Standard Club Ltd.
Holding company means a holding company (as defined by section 1159 CA 2006) or a parent undertaking (as defined by section 1162 CA 2006).
Related company means, in relation to any company, any subsidiary or holding company of that company or any subsidiary of any such holding company.
Second nomination, participation nomination and prospective participation have the meanings given to those expressions in the Mandatory Offer Byelaw.
Date issued: 26 October 2017
For auction office use only: D2017007
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