Prudential Regulation Authority Rulebook

5.1

As Lloyd’s is (and was prior to 15 March 1979, being the relevant date set out in the Solvency II Directive) composed of syndicates which separately accept general insurance business or long-term insurance business, the PRA considers Lloyd’s to be a composite undertaking for the purposes of the Solvency II Directive.

5.2

The Solvency II Directive requires composite firms to maintain separate management of general insurance business and long-term insurance business. In practical terms, this requires that managing agents separately manage syndicates which carry on general insurance business from syndicates which carry on long-term insurance business. However, where a single syndicate carries on both general insurance business and long-term insurance business pursuant to the exceptions referred to at Composites 6.2 in the Composites Part of the PRA Rulebook, paragraphs 3.1–3.3 of Supervisory Statement SS8/15 on Composites (Appendix 2.8) are intended to assist in determining how the requirements of the Composites Part will apply to managing agents.

5.3

Paragraphs 2.1–2.3 of SS8/15 refer to a firm’s permission to effect and/or carry out contracts of insurance which may be general insurance business or long-term insurance business, or both, and, within those categories, to the particular classes of insurance business. For the purpose of the application of rules in the Composites Part to Lloyd’s, references in paragraphs 2.1–2.3 of SS8/15 to a firm’s ‘permission’ in respect of ‘classes’ of insurance business are to be interpreted by reference to syndicates which carry on what would be, as the context requires:

• general insurance business, if the syndicate was a firm authorised to effect and/or carry out contracts of general insurance business;
• long-term insurance business, if the syndicate was a firm authorised to effect and/or carry out contracts of long-term insurance business; and
• both general insurance business and long-term insurance business, if the syndicate was a firm authorised to effect and/or carry out both contracts of general insurance business and contracts of long-term insurance business, as contemplated by paragraph 2.3 of SS8/15.

5.4

The references in Composites 2.2 to ‘general insurance business’ and ‘long-term insurance business’, and the activities relating thereto, are to be similarly interpreted.