Lloyd’s to set up second PCC
Lloyd’s has received regulatory approval from the Prudential Regulation Authority and the Financial Conduct Authority in the UK to set up a second protected cell company.
The new PCC provides a broadened range of capabilities for the market and an enhanced accessibility for investors – a key deliverable of the Future at Lloyd’s strategy, the organisation said.
Lloyd’s previously announced a number of successful deals through London Bridge Risk PCC and is building on that success by sponsoring a second vehicle.
It said the second London Bridge PCC would offer a number of extensions in the coverages it can write and the way in which those obligations can be funded, together with improvements in the execution of these collateralised transactions.
LB2 will provide an access point for qualifying institutional investors, to deploy funds in a tax transparent way into the Lloyd’s market.
Lloyd’s members and managing agents will be able to use the new vehicle to manage their capital and risk management requirements by attracting new sources of capital and reinsurance protection.
LB2 is authorised to undertake three additional capabilities:
• For a corporate member, in addition to writing quota share reinsurance, it will also be able to write excess of loss coverages
• For a syndicate, it will be able to provide collateralised reinsurance, on both an excess of loss and quota share basis
• For all structures it will be able to fund the reinsurance obligation through the offer, by the segregated cells of the PCC, of either preference share or debt securities
Lloyd’s said the new PCC would be owned by an Orphan Charitable Trust, providing an independently managed transformer vehicle to the market, directly regulated by the PRA and FCA.
LB2 will provide independent services to investors, members and/or syndicates of Lloyd’s depending on the nature of reinsurance written.