Eight leading reinsurers lend support to Lloyd's $900m new cover
Source: Middle East Insurance Review | Jul 2021
Last month Lloyd’s announced it has secured a landmark GBP650m ($900m) five-year cover for its central fund which supports sustainable and profitable long-term market growth.
The GBP650m protection was structured and placed by Aon. It is a layered structure supported by newly-created cell company Constellation IC – financed by investment bank JP Morgan – as well as a panel of eight reinsurers: Arch, Berkshire Hathaway, Everest Re, Hannover Re, Munich Re, RenaissanceRe, SCOR and Swiss Re.
The new and unique structure will provide increased protection for Lloyd’s customers and the market against severe tail-end events and further improve the quality and financial strength of Lloyd’s balance sheet, said Lloyd’s in a statement. Tail-end events are low-probability but high-impact events, such as the 2008 financial crisis or a global pandemic.
The new multi-layered cover will reimburse aggregate payments from the central fund in excess of GBP600m and up to GBP1.25bn, which will serve as a key component in Lloyd’s chain of security.
Lloyd’s central fund is available at the discretion of the council of Lloyd’s to meet any valid claim that cannot be met from the resources of any member. Should syndicates need additional assets to meet their liabilities, the funds at Lloyd’s ensure that members have additional resources available. In the rare event that a member’s capital is insufficient and that member is not able to provide further assets to the relevant syndicates, Lloyd’s central capital provides further financial support to ensure valid claims are paid. M