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Change of control for underwriting agents

The approval of controlling interests in an underwriting agent requires Lloyd’s approval (paragraph 43 of the Underwriting Byelaw) and the approval of the PRA and FCA.

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In very broad terms, the overriding principle is that where a company or individual acquires 10% or more of the shares and/or voting interests in an underwriting agent or approved run-off company or its parent company, the firm needs prior approval from the PRA, FCA and Lloyd’s.

What is the new process?

Where there is a proposed change of control in respect of an underwriting agent or approved run-off company, the following procedure should be adopted:

  1. Informal notification to the Governance and Solvency II Manager or Oversight Manager;
  2. Electronic notification to Lloyd’s of the intention to change a controller and confirmation that any tax implications have been explored with Lloyd’s Tax Department;
  3. Lloyd’s has 3 working days to respond to the initial notification and raise any immediate issues or to exercise its right to challenge;
  4. Detailed due diligence is then undertaken by Lloyd’s (further information on potential areas for consideration are detailed below);
  5. The firm subsequently submits the application to the PRA and FCA;
  6. The firm notifies Lloyd’s when PRA and FCA approval is granted; and
  7. Lloyd’s gives written approval once satisfied with all aspects of the transaction (including financing, Group and investors);
  8. Lloyd’s reserves the right to reject an application or perform additional due diligence as material information is presented.