Lloyd’s, the global marketplace for the underwriting of commercial, corporate and speciality risk solutions, has secured the landmark five-year cover for its Central Fund that supports sustainable, profitable long-term market growth.
The new multi-layered cover will reimburse aggregate payments from the Central Fund in excess of £600m. up to £1.25bn, which Lloyd’s said would be a key component in its chain of security.
It would provide increased protection for Lloyd’s customers and the market against severe tail end events, which are low probability but high impact events such as the 2008 financial crisis or a pandemic.
The cover would also improve the quality and financial strength of the Lloyd’s balance sheet.
The protection has been structured and placed by Aon. One layer has been underwritten by the newly created cell company Constellation IC, financed by investment bank J.P. Morgan. Constellation IC is an incorporated cell of White Rock Insurance (Guernsey) ICC, a subsidiary of Aon and managed by Aon Insurance Managers (Guernsey).
Reinsurers Arch, Berkshire Hathaway, Everest Re, Hannover Re, Munich Re, Ren Re, Scor and Swiss Re have underwritten the other layers.
‘The selection of White Rock Guernsey to bring capital market support to Lloyd’s of London is the greatest endorsement yet of Guernsey as an international insurance centre of excellence.
‘I believe it’s our finest hour,’ said Paul Sykes, managing director of Aon Insurance Managers in Guernsey.
The news follows a number of major deals facilitated by Aon locally, including the first humanitarian cat bond for the Danish Red Cross and several mega deals for the de-risking of global pension funds.
‘We are bringing risk and capital together in new and innovative ways that will drive the growth of the insurance industry, making insurance more relevant to the needs of customers and society at large while delivering the best prices to our customers and policyholders,’ added Mr Sykes.
Burkhard Keese, chief financial officer at Lloyd’s, said: ‘This unique structure will enable us to fully support the market’s growth ambitions over the next few years, while also strengthening the resilience of our balance sheet.
‘Our capital management and position are now more resilient than ever, providing enhanced protection for customers.’