LLD 20
Application of PRU 3 to Lloyd's
LLD 20.1
Section 150 of the Act (Actions for damages)
- 01/01/2005
LLD 20.1.1
See Notes
A
contravention of the rules in
this chapter does not give rise to a right of action by a private person under section 150 of the Act (Actions for damages)
and each of those rules is
specified under section 150(2) of the Act as
a provision giving rise to no such right of action.
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LLD 20.2
Credit risk management systems and controls
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Application of PRU 3.1
LLD 20.2.1
See Notes
Subject to LLD 20.2.2 R, PRU 3.1 applies to managing agents and to the Society in accordance with:
(1) for managing agents, LLD 16.3.3 R; and
(2) for the Society, LLD 16.3.1 R.
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LLD 20.2.2
See Notes
In accordance with LLD 18.4.2 R, the rules and guidance in PRU 3.1 relating to the establishment and maintenance of a business plan
do not apply to the Society.
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LLD 20.3
Credit risk in insurance funds
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Application of PRU 3.2
LLD 20.3.1
See Notes
Subject to LLD 20.3.2 R, PRU 3.2 applies to managing agents and to the Society in accordance with:
(1) for managing agents, LLD 16.3.3 R; and
(2) for the Society, LLD 16.3.1 R.
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LLD 20.3.2
See Notes
PRU 3.2.23 R to PRU 3.2.32 G (Large exposure calculation for reinsurance
exposures) do not apply to the Society.
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Overall limitation of credit risk
LLD 20.3.3
See Notes
For Lloyd's, counterparty exposure is:
(1) for managing agents, the amount by which the net assets managed by or under the direction of a managing agent in respect of a syndicate together with any relevant balancing amount would decrease if the counterparty were to default;
(2) for the Society, the amount by which its net assets (which include those of its subsidiary undertakings) would decrease if the counterparty were to default; and
(3) for the Society's management of each member's funds at Lloyd's, the amount by which the member's net assets would decrease if the counterparty were to default.
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Large exposures
LLD 20.3.4
See Notes
For the purposes of PRU 3.2.20 R (Large exposure limits: counterparty exposure and asset exposure),
the Society may
determine the exposure to any letters of credit, guarantees or members' life assurance
policies as an exposure of the members in
aggregate.
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LLD 20.3.5
See Notes
For the purposes of PRU 3.2.22 R (Large exposure limits: market risk and counterparty limits), the Society must calculate the amount of and deduct from capital resources:
(1) an exposure (expressed as a percentage of the relevant member's capital resources held as funds at Lloyd's), other than to the assets identified in LLD 20.3.5 R (2)(a) to LLD 20.3.5 R (2)(c), of a member's capital resources held as funds at Lloyd's to a counterparty, in excess of the limits in PRU 3.2.22 R;
(2) an exposure in excess of 20% (expressed as a percentage of the aggregate of capital resources held as funds at Lloyd's) of the aggregate of capital resources held as funds at Lloyd's to a single issuer of:
(a) letters of credit;
(b) guarantees; or
(c) members' life assurance policies;
(3) an exposure of its own to a counterparty, in excess of the limits in PRU 3.2.22 R, expressed as a percentage of the Society's own assets.
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LLD 20.3.6
See Notes
For the purposes of PRU 3.2.22 R (Large exposure limits: market risk and counterparty limits), managing agents must calculate the amount
of and deduct from capital
resources an exposure (expressed as a percentage of the admissible assets held
in respect of the relevant syndicate)
of admissible assets held
in respect of a syndicate to
a counterparty in
excess of the limits in PRU 3.2.22 R.
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LLD 20.3.7
See Notes
If the exposures of capital resources held as funds at Lloyd's for members in the aggregate do not exceed the
limits in PRU 3.2.22R (3)(c), then,
for each individual member,
that limit may be replaced by 10%.
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Exposures excluded from the large exposure limits
LLD 20.3.8
See Notes
For managing
agents, in PRU 3.2.33 R and PRU 3.2.35 R, references to an exposure do not include
exposure arising from balancing
amounts.
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LLD 20.4
Asset-related Capital Requirement
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Application of PRU 3.3
LLD 20.4.1
See Notes
PRU 3.3 applies to managing agents and to the Society in accordance with:
(1) for managing agents, LLD 16.3.3 R; and
(2) for the Society, LLD 16.3.1 R.
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LLD 20.4.2
See Notes
This chapter applies to the Society for each member, including the
capital charge relating to central
assets, to the extent that those assets are held to support
a particular member.
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