Lloyd’s has announced the participation of the Ontario Teachers’ Pension Plan Board in the London Bridge Risk Protected Cell Company (PCC), providing initial capital in excess of £100 million with an expectation for that to grow over time.
Ontario Teachers’ is the administrator of Canada’s largest single-profession pension plan and has roughly $227.7 billion in net assets.
With coverage to start in 2021, the transaction will provide reinsurance cover to a member supporting three syndicates in the Lloyd’s market: CFC Syndicate 1988, Beazley’s Syndicate 5623 and Beat’s Syndicate 1416.
Leveraging the UK’s Protected Cell Company (PCC) legislation introduced in 2017, Lloyd’s sponsored the formation of London Bridge Risk, 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.
This makes it easier to deploy funds in a tax transparent way into the Lloyd’s market. Members can use this vehicle to manage their capital requirements by attracting new classes of investors, including pension funds, and will benefit from reduced set-up times and lower transactional costs.
“I am delighted to welcome major global pension investor Ontario Teachers’, who are well regarded in the ILS community, as the first to utilise LBR PCC to participate in underwriting at Lloyd’s,” said Burkhard Keese, CFO, Lloyd’s.
“It is a great achievement to see the PCC used, on-shore in the UK, to deliver reinsurance coverage and I am confident that this will be the first of many ILS investments into Lloyd’s as investors, members and syndicates increasingly appreciate the potential of this transformer vehicle.”
Nick Jansa, Senior Managing Director, EMEA, at Ontario Teachers added, “We invest in a range of global assets, including insurance-linked securities, and are always looking for efficient opportunities to maximise returns and increase value for our members.
“LBR PCC provides an innovative and efficient way to simplify our investment structures as we continue to grow our global footprint.”
Adrian Cox, CEO Beazley Group, noted, “Beazley is pleased to see the successful launch of the first LBR PCC acting as a transformer for institutional capital to access one of our most innovative underwriting portfolios.
“As those portfolios continue to grow over the coming years, Beazley hopes to see further users of the new UK ILS infrastructure benefiting from low cost, efficient access to the group’s underwriting expertise.”
Matt Taylor, Active Underwriter at CFC Syndicate 1988, added “As a newly established syndicate, we are delighted to have been able to benefit from capital support via LBR PCC, with its pre-approved
status as an onshore transformer vehicle in the UK. For a syndicate with CFC’s high growth expectations, capital delivery mechanisms like LBR PCC, that allow simplified investor access to our unique premium portfolio, are crucial when attracting sophisticated large-scale institutional investors.”
Paul Rayner, Partner, Beat Capital Partners said: “Beat is excited to have partnered with LBR PCC in the formation funding of Syndicate 1416. Given our perpetual third-party capital outlook, LBR PCC is a strategically important innovation that allows us to efficiently connect with high quality alternative capital partners alongside our existing capacity supporters.”