We have listed below some information that may be of general interest.  For more information on any of these subjects please contact your Names Executive.

LMAS Service Standards:  LMAS has various service standards which it adheres to.  The two standards which may be of most interest to Names are the answering of correspondence within one week and the return of telephone calls within 24 hours.  The remaining service standards are available upon request.

Partial Release of Funds: Each year Lloyd's completes calculations for Names with open syndicate participations and this process, known as "The Capital Test", determines the minimum funding requirement for Names.  The figures are published in April (1 January Valuation) with a subsequent revision based on the position at the end of June.  In the event that a Name's Funds at Lloyd's exceed the funding requirement as calculated by Lloyd's, Names may be eligible to apply for a partial release of funds held in excess of their requirement.  A charge of £100 still applies and there are several initial criteria which must be met before an application for a release can be submitted:

The value of the funds held at Lloyd's must be in excess of the minimum funding requirement in order for the excess to be released.

All current liabilities must be funded, including any Market Services Charges or Member's Agents Expenses; THERE MUST NOT BE ANY OUTSTANDING DEBTS.

The funds are of a releasable nature, for example no releases are permitted from the Special Reserve Fund whilst the Name has continuing liabilities through open syndicates.

An exercise is conducted annually by LMAS to advise Names where their Funds at Lloyd's exceed the funding requirement and the release criteria have been met.  This process takes place after the distribution process has been completed and the revised funding requirement based on the position at 30th June has been published.  LMAS will contact Names where a potential release is available and, subject to the Names request meeting all the necessary criteria, an application will be submitted to Lloyd's.  You should be aware that funds held in the Special Reserve Fund can not be released and a minimum of £5,000 must be maintained as non SRF monies.  Lloyd's impose a concentration disallowance on certain categories of assets held in Funds at Lloyd's.  Your Names Executive can provide more details on Lloyd's concentration of assets rules.  Applications for a partial release must be lodged with Lloyd's before a specified date in October for Lloyd's to consider the request.  After that date the window of opportunity closes for the year as Lloyd's begins the process of calculating solvency for the subsequent year. 

Reducing Your Bank Guarantee/Letter or Credit: As mentioned above, at two points during the year Lloyd's perform a Capital Test to evaluate a Names' Funds at Lloyd's position against their potential liabilities. The relevant figures are published in April, using a valuation of assets at 1 January, and August, using a valuation at 30 June.  In 2010 Lloyd’s Market Services  introduced a charge of £100 to process a release. This cost should therefore be taken into account when considering our usual recommendation that any Name entitled to a reduction in their Funds at Lloyd's should, at the appropriate time, reduce their Bank Guarantee or Letter of Credit and reduce the amount they pay to their Bank for this service.  A Name may also wish to settle any Cash Calls or Losses from their own resources by providing LMAS with a cheque.  We could then apply to Lloyd's for a substitution of assets, for which there is currently no charge, and reduce the Guarantee/Letter of Credit by a similar amount.  

Deposit to Personal Reserve Fund Transfer: Any Name that has cash in the General Deposit knows that, due to the Trust Deed under which these funds are held, it is difficult and time consuming to release these funds to settle losses.  It may also incur additional administration charges from Lloyd’s.  It is possible to perform a Deposit to PRF transfer by signing the relevant Deed which, with a few exceptions, would enable the Deposit funds to be transferred to the PRF.  This would provide a quicker, easier and potentially cheaper way for the cash to be utilised to settle losses.  It should also be mentioned that it is also quicker and easier for Lloyd's to perform a compulsory draw down against funds held in the PRF.

Substitution of Funds: Names may exchange an asset held at Lloyd's for another acceptable asset of equal value.  In order to request a substitution, Names should contact their Names Executive to make the necessary arrangements and to submit the appropriate application on their behalf.  Cash can be deposited into a Name's Funds at Lloyd's in exchange for a release of funds of an equal value.  This cash can then be drawn upon to settle losses, however, if the funds are placed into the General Deposit a voluntary release of funds Form would be required in order to transfer the cash to settle losses.

Total Release of Funds: With the closure of all open syndicates and settlement of any outstanding liabilities the majority of Name's would become eligible to have the balance of their Funds at Lloyd's released.  Following completion of the distribution process at the end of June, Names with no open syndicate participations can apply for the release of their remaining Funds at Lloyd's through their Names Executive.  LMAS will send notice to Names that are eligible for a release following the conclusion of the distribution process and, provided that all remaining liabilities have been funded, instructions for the release of assets can then be provided by Names to LMAS, for submission to Lloyd's.  The revisions to the Market Services Charging Structure have removed both the Total Release and Cessation of Membership Charges.

Estates of Deceased Names:  Following the death of an underwriting Name of Lloyd’s and the issue of the Grant of Probate or Letters of Administration, executors will be in a position to make a distribution of assets as set out under the terms of the Will or that governed by the rules of intestacy.  However, they may wish to consider seeking leave of the Court before doing so.

Names will be aware that all 1992 and prior years of account were reinsured into Equitas under Lloyd’s Reconstruction and Renewal plan.  On 25 June 2009 Mr Justice Blackburne approved a transfer, under Part VII of the Financial Services & Markets Act 2000, of all 1992 and prior year non-life Lloyd’s liabilities of open and closed year Names to Equitas Insurance Limited.  The transfer took effect on 30 June 2009.  The result of this business transfer was that no Name has any further liability under English law on their 1992 and prior non-life Lloyd’s business and this provision applies not only under English law but throughout all jurisdictions of the European Economic Area (EEA).  In the unlikely event that Equitas proves to be insolvent, no policyholder with an unsatisfied claim will be able to enforce that claim in any Court of the EEA to recover it from any Equitas Name.  This removed the contingent liability referred to in the original Reconstruction and Renewal Agreement. 

So far as residual exposure to claims arising from the 1993 and subsequent years of account all of which have been reinsured forward under Lloyd’s traditional reinsurance to close arrangements into a following syndicate at Lloyd’s.  The residual exposure to these underwriting years would only arise in the event of a capital provider of a reinsuring syndicate being unable to meet their liabilities.  In these instances an application may be made for payment out of the Lloyd’s Central Fund.  The use of the Central Fund by Lloyd’s for the purpose of making good  unpaid liabilities of a member of Lloyd’s is an authorised and normal use of the Central Fund although such use is ultimately at the discretion of the Council of Lloyd’s.  In the unlikely event that claims were not settled out of the New Central Fund, or other Lloyd’s assets, any outstanding liability of the Name would fall back on his or her estate (being the Insurer with the primary contractual liability to the policyholder).  To date no such outstanding liabilities have ever reverted to a deceased Names estate.      

It is possible for the executors to achieve protection from any personal liability following the distribution of the estates assets and in the event of the failure of the New Central Fund the executors may wish to seek the protection of the Court through a “fast track application procedure” sponsored by the Society of Trust & Estate Practitioners (STEP).   It was agreed that this fast track method should be established where an application could be made to the Court in a simple unopposed application to a  Master of Chancery Division to obtain the appropriate authority.

The Practice Direction giving effect to the fast track method was subsequently issued by the Chief Chancery Master.  The procedure was initially most appropriate where all liabilities of the estate in respect of syndicates of which the deceased was a member had been reinsured into Equitas.  The Practice Direction was subsequently revised to include 1993 and post business.  The extended Practice Direction covering the reinsurance of 1993 and subsequently years of account into succeeding Lloyd’s syndicates and/or the protection afforded by either the Estate Protection Plan or the Exeat policies has now been approved by the Vice Chancellor. 

The revised Direction is available from this office to Names or their legal advisors upon request.

We should point out that the fast track application procedure has only been approved in the English Courts.