Charles Taylor Managing Agency Ltd

Managing Agent Name: Charles Taylor Managing Agency Ltd

Subject: Auction Disclosure

Syndicate Affected: 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 2017 year of account (“YOA”).

Members are also 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.

Syndicate capacity & capital

The 2017 SBF submitted to Lloyd’s on 6 September 2016 is based on stamp capacity for the 2017 YOA increasing to £105 million from £90 million in 2016 YOA. No new classes are being added in 2017, and the increase is entirely due to changes in currency exchange rates. The SBF has been agreed by Lloyd’s.

The Syndicate continues to receive support from several sources of capital, both Names and corporate capital. The Standard Club is the cornerstone capacity provider of the Syndicate and plans to continue providing 40% of the capacity for 2017 YOA.

The Syndicate ECA includes a 20% new entrant’s capital loading, which is required for the first three years of a syndicate’s operation. This is the third and final year for this new entrant’s loading on the Syndicate.

Changes in Underwriting staff

In 2016, the Syndicate has strengthened the team with four new underwriters, which will further increase its ability to write its plan in 2017.

-        Joshila Tailor, Fine Art and Specie Class Underwriter; previously with Pembroke Managing Agency

-        Sajjad Jaffer, Marine Liability Class Underwriter; previously with Chubb Managing Agency

-        Hubert Belanger, Political Risk Class Underwriter; previously with Atradius and Chubb Insurance before that

-        Alexandra de Souza Mattos, Political Violence & Terrorism Underwriter; previously with Kinetic Insurance Brokers and RFIB Group before that

In addition, CTMA recruited Ajay Gupta as Chief Underwriting Officer from Mitsui Sumitomo Insurance Group. His role includes bringing over-sight and discipline to the underwriting of the syndicates under management. Robert Dorey, the Active Underwriter of Syndicate 1884, has resigned from the CTMA Board to concentrate fully on the further development of Syndicate 1884.

 

Additional fees and terms to note are as follows:

  • No profit commission will be payable by 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 and 2016 YOAs, remain applicable for the 2017 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:

  1. 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;
  2. 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;

  3. 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;

  4. 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;

  5. The existence of differences in commercial terms between “freehold capacity” and limited tenancy members. Certain 1884 Members participate on a “limited tenancy” basis, that is 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:

  1. 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.
  2. 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.

  3. 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.

  4. 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: 

  1. 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)
  2. 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.   

c.    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.

Additional Definitions:

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: 28 October 2016

Contact Information

Agency contact name: Julia Davis

Agency contact no: + 44 (0)203 320 2247

 

For auction office use only: D2016002

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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