Lloyd’s launches ILS vehicle London Bridge Risk PCC to deploy capital in London market

Lloyd’s of London has sponsored the creation of an independently owned and managed UK protected cell company (PCC) London Bridge Risk that will make it easier for insurance-linked securities (ILS) investors to deploy capital into the London Market.

The UK's Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) have granted approval to set up the new multi insurance special purpose vehicle (mISPV).

The platform aims to provide investors with an alternative means to access Lloyd’s capacity and makes use of the UK ILS regulations that came into force in December 2017.

It will provide an access point for both UK and international third party and alternative capital providers, including ILS investors, to invest in Lloyd’s in a tax transparent way.

Lloyd’s members will be able to use the new vehicle to manage their capital requirements by attracting new classes of investors such as pension funds and will benefit from reduced set-up times and lower transactional costs.

According to Lloyd's, standardised documentation and processes have been developed, designed to make the process quicker, more tax transparent and to streamline the approach to regulatory approval for investors.

Burkhard Keese, CFO of Lloyd’s said: “As part of the Future at Lloyd’s strategy, we continue to look at all ways we can make it easier and more efficient to deploy and manage capital at Lloyd’s. We are delighted that Lloyd’s has received regulatory approval to set up a new investment platform that will be available for all of the market to use.

“Through our sponsorship of the London Bridge Risk PCC we will give investors the option of a new tax transparent way to participate in the market with standardised documents and a much simpler repeatable process.

“ILS investment is not new to Lloyd’s, but this is the first time that a UK PCC has been set up as a platform to allow investors to back and provide capital to Members at Lloyd’s. We look forward to working with investors and Lloyd’s Members who wish to use this new PCC to structure their participation at Lloyd’s.”

London Bridge Risk PCC will be managed by Bermuda-based Horseshoe, which specialise in the management of ILS vehicles and operate across multiple jurisdictions. While the overall responsibility for running the PCC will rest with its board of directors - Mike Baker from Horseshoe as the CFO, Helena Whitaker from Intertrust as the CEO, and Mark Dyson from Lloyd’s as the chair.

Andre Perez, CEO of Horseshoe, commented: “We are honoured to be involved with this innovative ILS structure which reinforces further Lloyd’s commitment to the Future at Lloyd’s. We look forward to working with investors and members to expand a complementary mechanism by which capital can be deployed into Lloyd’s. More broadly, this new PCC reaffirms the ILS potential of the London Market and hopefully this is the first of many more to be established in the UK”.