Characteristics of a Special Purpose Arrangement include:
- A Special Purpose Arrangement (SPA) writes a single quota share reinsurance contract of another Lloyd’s syndicate, known as the ‘host syndicate’. Both syndicates are managed by the same Lloyd’s managing agent.
- In other respects an SPA shares the same requirements of a market-facing syndicate; it will have a business plan and capital requirement agreed by the Capital & Planning Group and it will be supported by one or more approved members of Lloyd's.
- An SPA Quota Share reinsurance contract can cover the host syndicate's whole account or defined classes of business within the host's overall plan. An SPA arrangement may run for more than one underwriting year of account, however each annual renewal is subject to Lloyd's annual business planning process.
- An SPA can reinsure business that a business partner may have introduced to the host syndicate as part of an overall partnership arrangement. In order to ensure alignment of interests, the host syndicate must retain a minimum of 10% of that business.