14 January 2021
Clifford Chance advises Lloyd's on the establishment of the ground-breaking insurance linked securities platform approved by the PRA
International law firm Clifford Chance has advised the Society of Lloyd's on the establishment of the ground-breaking Lloyd's insurance linked securities (ILS) platform, London Bridge Risk PCC Limited, to meet one of the objectives of the Future at Lloyd's strategy. It is the first UK ILS structure which has been approved by the PRA for use for multiple, market wide transactions for Lloyd's members and will establish a market standard and efficient mechanism for existing and new investors to participate at Lloyd's for years to come. It is an exciting and significant innovation to the Lloyd's market and a significant development for the wider UK ILS market. It demonstrates PRA and FCA support for more innovative use of the UK ILS Regulations, in addition to their continued support for more seamless cat bond structures such as the recent issuance by Sussex Capital UK PCC for Brit, a global specialty insurer.
The appointment of Clifford Chance followed roles advising the London Market Group task force on its work with HM Treasury on the establishment of the UK ILS regime and working on UK ILS structures for SCOR, Pool Re, Brit and Neon. Clifford Chance worked with Lloyd's and the regulators over an extended period to devise a structure and set of market standard template documentation with flexibility to accommodate a range of individual investment models and objectives. These have been designed specifically to meet Lloyd's capital requirements and market practices, whilst also ensuring compliance by the PCC with the UK ILS regulations. It is the first time that the PRA have approved an arrangement of this nature and it is expected to be beneficial to both existing and new investors into Lloyd's. It will facilitate capital efficient investment into Lloyd's and reduce the frictional costs and time otherwise required to establish and operate a standalone ILS investment vehicle.
Katherine Coates, corporate and insurance partner at Clifford Chance, said: "It has been a privilege to work with Lloyd's and the PRA and FCA to design and implement this innovative structure which is one of the important building blocks of the Future at Lloyd's project and will streamline the process for investors to participate in this important global insurance market."
The team was led by Katherine Coates, assisted by partner Cheng Li Yow and senior associates James Cashier and Trish Gandhi, supported by partner Will Winterton and senior associate Tess Crook on security arrangements.