Lloyd’s of London has fined Amlin Underwriting Ltd £630,000 ($786,600) for breaches of the Lloyd’s Premium Trust Deed (PTD) and for failings in its response to those breaches.

Following a restructure of the Amlin group in 2014, which AUL is part of along with two non-Lloyd’s insurance companies, it was found that premiums for certain outward reinsurance contracts were paid from the premium trust fund on behalf of multiple group entities including the non-Lloyd’s insurance companies, according to Lloyd’s.

Intelligent Insurer reported that the payments made on behalf of the non-Lloyd’s entities did not relate to the underwriting of AUL’s Syndicate 2001. This constituted a breach of the terms of the Premium Trust Deed, under which assets are held in trust for the benefit of members and ultimately policyholders and therefore cannot be used to pay for liabilities of non-Lloyd’s entities.

AUL then failed to ensure that this matter was investigated in a fully effective and timely manner and it failed to ensure that the board and Lloyd’s were notified of the breach promptly.

There was no allegation this breach was intentional and AUL acknowledged the breach. AUL also fully repaid all amounts incorrectly taken (with interest).

In addition, at no point was the solvency of the trust fund at risk. “The fine reflects the importance that Lloyd’s places on the terms of the PTD being followed,” said Jon Hancock, director, performance management.

“The reputation of the market depends on our syndicates and policyholders knowing that assets held on their behalf are used appropriately.”

“When an error is discovered it is incumbent on our firms to respond quickly and effectively.”

AUL accepted the errors and co-operated fully with the Lloyd’s investigation. The fine of £630,000 includes a 30 per cent discount for early settlement and AUL will pay £90,500 towards the cost of proceedings. This has been approved by the Enforcement Board of Lloyd’s.

This is the first fine to be issued against a firm under the framework for the imposition of sanctions that was adopted by Lloyd’s in 2014 and which establishes the appropriate level of sanctions when prosecuting enforcement cases.

Amlin has offices in Hamilton at 141 Front Street.