Lloyd's plans to change capital rules

• IBTimes RSS
• Print
• E-Mail
• digg
• Del.icio.us

A report to market participants sent out on Monday along with a letter from Lloyd's Chairman Peter Levene laid out recommendations for changing the way in which individual investors, known as "Names", invest in the market.

Lloyd's said that while it still backed the centuries old custom of Names investing in the market, opportunities for them were becoming increasingly limited as the terms under which they currently invest are seen as being outmoded and unattractive by many of the market's insurers.

Levene said: "The current basis on which private capital participates is not a sustainable model for the future."

The report, produced by a committee comprising the heads of two of Lloyd's biggest insurers as well as the chiefs of two of the biggest investment firms advising Names, suggests two new ways in which Names could invest in Lloyd's businesses in future.

The first is by agreeing to a new, more flexible contract in which they invest directly in a syndicate a contract which may not give them as many rights or which terminates at the end of a fixed period.

The other suggestion is that Names should be allowed to set up syndicates of their own that reinsure other syndicates at Lloyd's, thereby allowing them to invest in the market but in limited circumstances and time periods.

The terms under which Names have already invested in the market will not be changed, Lloyd's said.

DWINDLING ROLE

Names were the backbone of the market's capital base until the early 1990s, when institutional investors and other insurance firms were allowed to put capital into the market.

• 1
• 2