Private Members enter the Lloyd's market through Limited Liability Vehicles (LLVs). Corporate Investors can support syndicates through direct participation or via ownership of an LLV spreading their risk across a number of syndicates.
An LLV is designed specifically for trading at Lloyd's. The LLV is used to limit your exposure to the Funds at Lloyd's, to only those assets used to support your underwriting and the value of any other assets in the LLV only. Any assets that are outside of the LLV are not exposed. The LLV enables the exposure at Lloyd's to be limited to those assets supporting the underwriting.
Portfolios strike an appropriate balance between classes of businesses, line size on individual syndicates and management of exposure to large / significant losses through the monitoring of Net Catastrophe Risk Scenarios.
The Choice of Limited Liability Vehicle (“LLV”)
The statements, comments and assumptions made in this section are referring to a UK domiciled tax payer.
The first decision that all potential new clients must make is which form of vehicle is more appropriate to their circumstances, a UK limited company (Nameco) or an English Limited Liability Partnership (LLP). Once that decision has been made a potential client can either establish a new vehicle or purchase an existing one that is already trading at Lloyd’s.
Key Characteristics of a Nameco and a LLP
• Limited liability underwriting, whether as a Nameco or LLP, is a business trade, and is taxed as such. The Nameco is a UK registered company, and the LLP at Lloyd’s operates exactly the same way as any other English LLP. Both vehicles are deemed to be carrying on a trade – underwriting at Lloyd’s
• Both vehicles offer limited liability. This means that the vehicle’s ultimate liability in the event of a loss is limited to the extent of the assets held within the vehicle. Assets are deemed to be cash or assets held within a Nameco, Funds at Lloyd’s (backing either vehicle) and the sale value of either vehicle’s capacity.
• The establishment cost of both vehicles is similar.
• The minimum capital funding requirement (known as Funds at Lloyd’s) for both vehicles is £350,000. However, in the case of an LLP each individual member of the LLP is required to put up a minimum of £100,000.
• Both vehicles need to be established prior to the Lloyd’s capacity auctions, which start in October, each year.
You may find this Lloyd's produced video a useful guide and so please click on the link to watch: How the Market Works
If you would like to receive further information about membership of Lloyd's please either email Alistair Troughton or telephone Alistair on 07554 451549.
To find out more about Hampden Agencies and the opportunity of participating at Lloyd's, please click here
For some frequently asked questions please click here.