On 25 March Lloyd’s issued Market Bulletin Y4139 (the Bulletin) providing additional guidance for the preparation of the 2009 individual capital adequacy (ICA) submissions for run-off and specialist RITC syndicates. The guidance should be read in conjunction with Market Bulletin Y4128 (the Guidance), issued on 29 February, which sets out the general guidance for 2009 ICA submissions to Lloyd’s.
The FSA’s requirements for ICA standards for insurers are set out in the General Prudential Sourcebook (GENPRU) and the Prudential Sourcebook for Insurers (INSPRU). The Guidance is the result of the clear responsibilities the FSA has placed upon Lloyd’s with regard to the ICA process. The Guidance has four main sections:
1. Introduction – this sets out the required basis and scope for 2009 syndicate ICAs and Lloyd’s overall approach to its review work;
2. Minimum standards – this sets out the main issues and minimum standards required;
3. Technical section – split by risk group, it contains detailed guidance for those responsible for preparing the ICA;
4. Appendices – containing suggested formats for the ICA document, minimum standards mapping and the additional pro-forma information required.
The Guidance specified that part of it did not apply to run-off and specialist RITC syndicates and the Bulletin has been produced to address those gaps. The Bulletin provides guidance on the collection of submissions, deadlines, deferrals, and on the application of Lloyd’s minimum standards for run-off and RITC syndicates. It also emphasises that for run-off syndicates ICAs should be completed on the basis that the syndicates will be run-off to natural expiry and “no account should be taken of planned or potential closure by any means whatsoever”. As far as RITC syndicates are concerned, the Bulletin states that the ICAs should be calculated on the basis of existing business at the time of submission and 2009 underwriting should be excluded.
Syndicates should also refer to GENPRU, INSPRU and the FSA’s Briefing looking ahead to Solvency II (October 2007) as additional sources of information.
For the full Market Bulletin for February, please click here. For the full Market Bulletin for March, please click here.
