Lloyd’s Central Fund is a mechanism, governed by the Council of Lloyd’s, which will pay any valid claim that cannot be met from the resources of any member.
The new multi-layered cover will reimburse aggregate payments from the Central Fund in excess of £600 million, up to £1.25 billion. This, Lloyd’s said, serves as a key component in its chain of security. Its layered structure is supported by newly created cell company Constellation IC Limited, which is financed by J.P. Morgan. It also includes a panel of eight major reinsurers: Arch, Berkshire Hathaway, Everest Re, Hannover Re, Munich Re, RenaissanceRe, SCOR and Swiss Re.
Aside from providing a layer of protection to the Central Fund, the new structure creates a significant buffer against adverse solvency developments and improves Lloyd’s central solvency ratio.
“We are very proud to place this innovative cover with eight of the world’s leading reinsurance companies and secure the support and commitment from one of the largest investment banks, J.P. Morgan,” said Burkhard Keese, chief financial officer of Lloyd’s.
“This unique structure will enable us to 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.”