In a move which provides investors with easier access to the specialist Lloyd’s of London insurance and reinsurance marketplace, regulators in the UK have approved the creation of a new multi Insurance Special Purpose Vehicle (mISPV).
As part of the Future at Lloyd’s strategy, the receipt of regulatory approval from both the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) to establish the vehicle, provides the market with a new platform to improve the ease and transparency of managing capital.
Leveraging the UK’s Protected Cell Company (PCC) legislation introduced in 2017, Lloyd’s has sponsored the formation of London Bridge Risk PCC Limited, an independently owned and managed UK PCC.
The new PCC has been designed to provide an access point for UK and international investors, including those in the insurance-linked securities (ILS) space, to deploy capital in a tax transparent way into the oldest insurance market in the world.
For Members of Lloyd’s, the new vehicle provides a way to manage capital requirements by attracting new classes of investors, while at the same time benefitting from reduced set-up times and lower transactional costs.
According to Lloyd’s, standardised documentation and processes have been developed to make the processes quicker, more tax transparent, and also to streamline the approach to regulatory approval for investors.
Lloyd’s continues to note that so long as new individual proposals make use of the standard documentation and keep within regulators ‘Scope of Permissions,’ it will be a simple notification process for each deal, removing the need for costly, and often time consuming, individual applications.
Burkhard Keese, Chief Financial Officer (CFO) at Lloyd’s, commented: “As part of the Future at Lloyd’s strategy, we continue to look at all ways we can make it easier and more efficient to deploy and manage capital at Lloyd’s. We are delighted that Lloyd’s has received regulatory approval to set up a new investment platform that will be available for all of the market to use.
“Through our sponsorship of the London Bridge Risk PCC we’ll give investors the option of a new tax transparent way to participate in the market with standardised documents and a much simpler repeatable process.
“ILS investment is not new to Lloyd’s, but this is the first time that a UK PCC has been set up as a platform to allow investors to back and provide capital to Members at Lloyd’s. We look forward to working with investors and Lloyd’s Members who wish to use this new PCC to structure their participation at Lloyd’s.”
Lloyd’s states that the new vehicle has not been created to replace the more traditional approaches to deploying capital at Lloyd’s, but rather it compliments them by providing participants with greater choice.
Horseshoe, a specialist in the management of ILS vehicles, will provide insurance management services to the new PCC, London Bridge Risk PCC Limited.