Jubilee Managing Agency Limited

Managing Agent Name: Jubilee Managing Agency Limited

Subject: Disclosures Auction Season 2013

Syndicate Affected: s.5820

This statement has been prepared by Jubilee Managing Agency Limited “(Jubilee”) for the purpose of disclosing to existing and prospective underwriting members of Syndicate 5820 (the “Syndicate”) the terms that will apply to participation on the Syndicate for the 2014 underwriting year of account (“YOA”) and subsequent underwriting YOAs, and other information which may be of relevance to such members in considering their participation for the 2014 YOA.
Members are also referred to the Business Plan 2014 narrative, other SBF documents, and the Syndicate’s latest financial statements and quarterly returns, all of which have either been provided or are available to members (or their representatives as appropriate), and which include information on various changes affecting Jubilee and/or the Syndicate which have taken place since the end of 2012.

Change in managing agency ownership & transition of managing agency operations
On September 16, 2013, Jubilee’s parent company entered into an agreement with ANV Holdings BV to combine their Lloyd’s managing agency operations, whereby ANV Syndicate Management Limited (“ASML”) will acquire all shares in Jubilee upon completion of the transaction. As part of the purchase price, RSG will obtain 20% of the shares in ANV Syndicate Management Limited. Other commercial details of the transaction will not be disclosed. The Syndicate remains under the management of Jubilee until completion takes place. At that point it is intended that management of the Syndicate will transfer to ASML. The Syndicate’s 2014 business plan is unaffected by the proposed transaction and remains unchanged from the version submitted to Lloyd’s on September 12, 2013.

It is anticipated that senior management of Jubilee and ANV Syndicate Management Limited will be consolidated after completion and that the team working for the syndicate will not materially change. The transaction does not include the service companies Jubilee Service Solutions Limited, Lutine Assurance Services Limited and Jubilee Europe BV. These will remain as subsidiaries of Jubilee Group Holdings Limited. Completion of the transaction is expected in the fourth quarter of 2013 following confirmation of customary closing conditions and regulatory approvals.

Jubilee’s Board currently consists of Max Taylor (Non-Executive Chairman), Malcolm McCaig (Non- Executive Director), Mike Ramsey (Non-Executive Director), Frank Phillips ( Chief Executive Officer, appointed 10 July 2013), Chris Biles (Active Underwriter, Syndicate 5820), Ben Gilman (Chief Risk Officer), Eamon Brown (Chief Underwriting Officer, interim, appointed 20 August 2013), Janice Hamilton (Finance Director) and Carin Verhagen (General Counsel). Johnny Rowell, former CEO, stepped down on 10 July 2013.
In due course after completion of the transaction with ANV, the Boards of Jubilee and ASML will be consolidated.

Variation to Managing Agent’s Agreement
Under the Managing Agent’s Agreement (General) and the Deed of Variation thereto, all new members who participate on the Syndicate in a “freehold capacity” effective YOA 2013 onward (and any new members acquiring capacity in the auctions or otherwise) are subject to specific terms in respect of:
• the conduct of Jubilee and its Related Persons as defined (allowing Related Persons of Jubilee, or another syndicate managed by Jubilee, to accept underwriting business from the same source, and of the same classes of business, as are underwritten by the Syndicate);
• the existence of differences in commercial terms between members; and
• the opportunity to participate in future special purpose syndicates (including provisions which mean that a member’s allocation of capacity for a succeeding YOA may be all or in part determined by the capacity taken up by the member on the special purpose syndicate which may in the future be set up to reinsure the syndicate).

Additional fee and expenses policies are as follows:
• annual fees (0.75% of the member’s capacity for each YOA);
• profit commissions (17.5% of the member’s profit for each YOA);
• capacity fees (1% of the member’s capacity for each YOA up to and including the 2017 YOA; this is in addition to the syndicate’s annual fee and profit commission and is subject to a limit where the syndicate allocated capacity exceeds £250m);
• syndicate expenses (provision for charging the Syndicate for costs incurred in the acquisition of new business for the Syndicate, including through the acquisition of shares or assets).

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.

Syndicate allocated capacity
Lloyd’s has currently granted permission to Jubilee to increase the syndicate allocated capacity for the Syndicate for a succeeding YOA without complying with the requirements of paragraph 6 of the Syndicate Pre-Emption Byelaw, under which managing agents are obliged to seek the consent of members for pre-emptions exceeding 7.5% of current capacity.

Open 2010 YOA
The Syndicate’s 2010 YOA did not close within the usual Lloyd’s reinsurance to close (“RITC”) cycle and remains open. However, Jubilee is confident that the Syndicate’s 2010 YOA will be in a position to be closed simultaneously with the RITC of the 2011 YOA in February 2014, and is engaging positively with certain capital providers to those YOAs (see below) to that end.

Agreement with certain capital providers in respect of 2010 and 2011 YOAs
Certain capital providers have rights in respect of the RITC of the Syndicate’s 2010 and 2011 YOAs which differ from the position under the standard Managing Agency Agreement. Specifically, they have the power to accept or decline any RITC quotation or proposal for these YOAs. In addition, under the same agreement with these capital providers, moneys held in respect of the 2010 and 2011 YOAs whilst they remain open may not be co-mingled with moneys held in respect of subsequent years. Although not considered likely, this may increase strain on working capital and could thus, whilst one or both of the 2010 or 2011 YOAs remain(s) open, potentially necessitate a cash call on members participating on those subsequent years, including the 2014 YOA.

Prospective aligned capital participation
Jubilee’s ultimate shareholder also participates on the Syndicate’s 2012 and 2013 YOAs through Jubilee Corporate Member LLP. It is anticipated that Jubilee Corporate Member LLP will maintain its participation for the 2014 YOA at the same premium limit as for the 2013 YOA.
However, under terms agreed with a capital provider to the Syndicate’s 2013 YOA, that capital provider has the option to increase its premium limit by £5 million for the 2014 YOA and Jubilee Corporate Member LLP may be obliged to reduce its own participation to accommodate that capital provider’s increased premium limit. The aligned capital participation on the Syndicate’s 2014 YOA may thus reduce by up to £5 million as a result of this circumstance.

Relationship with reinsurance group
In the interests of transparency, Jubilee wishes to advise members that separate subsidiaries of a single reinsurance group act respectively as a capital provider to syndicate 5820 and as a provider of significant reinsurance protection to syndicate 779. Jubilee wishes to emphasise that these arrangements were entered into and continue to be managed independently of each other, and involve separate entities and a distinct group of individual employees within the corporation in question. As such, neither element of the relationship is conditional on or influenced by the other.

Property income & Casualty plans
Some growth forecast in the Syndicate’s Property franchise for 2014 is based on certain proposed changes which require internal approvals and are subject to discussion with Lloyd’s. Should these proposed changes not be approved, the ultimate approved SBF gross net premium for Property may reduce by up to £1.6 million from the amount forecast in the final SBF submission of 12 September 2013. Plans are under development for Jubilee’s Casualty franchise to complement its existing programme with a number of follow lines on US general liability binders for the 2014 YOA; these plans are likewise subject to internal review and discussion with Lloyd’s.

Related parties transactions
Under the 100% ownership of Ryan Specialty Group, LLC (“RSG”), Jubilee is currently subject to a variation to its regulatory permission under which gross net premiums produced to a Jubilee Syndicate by other RSG entities in a given YOA may not exceed 20% of that Syndicate’s stamp capacity in that YOA. Business produced from four RSG companies is currently excluded from the calculation of related parties business under the 20% rule. RSG and Jubilee are voluntarily making changes to corporate structure and their interpretation of the related parties’ restriction which will have the effect of removing these exemptions from all these companies except Lutine Assurance Services Limited. It is a matter of strategic importance, particularly given its ownership that Jubilee should be free of conflicts of interest in both fact and appearance, and these changes to structure and internal rules are designed to help formally ensure this.

Members are also advised that Jubilee currently has outsourcing and third-party administration agreements in place with other RSG companies. Such contracts are transacted on a case-by-case and arm’s-length basis.

There are no related party transactions with ANV Syndicate Management. It is not clear how this restriction will continue to operate following the sale of JMAL to ASML, if at all.

Date issued: 20 September 2013

Contact Information
Agency contact name: Andrew Hall
Agency contact no: + 44 (0)20 7220 8669

For auction office use only: D2013015

DISCLAIMER: Lloyd's is not responsible for the content of any auction disclosures, and acts merely as publisher of information provided by managing agents. If you have any questions regarding the content, you should contact the relevant managing agent.



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