GENPRU 2.3 Application of GENPRU 2 to Lloyd's

GENPRU 2.1 applies to the Society in accordance with INSPRU 8.1.2 R.

GENPRU 2.1.38 R to GENPRU 2.2.39 G apply to managing agents in accordance with INSPRU 8.1.4 R.

For the purposes of GENPRU 2.1.24 R, the Society must calculate the MCR in respect of the general insurance business of each member as the higher of:

1. (1)

   the member's share of the base capital resources requirement in respect of general insurance business for the members in aggregate; and

2. (2)

   the general insurance capital requirement for the members, calculated according to GENPRU 2.3.11 R.

For the purposes of GENPRU 2.3.5R (1), the Society must determine the member's share by apportioning the base capital resources requirement in respect of general insurance business for the members in aggregate between members in proportion to the result for each member of GENPRU 2.3.11 R.

For the purposes of GENPRU 2.1.25 R, the Society must calculate the MCR in respect of the long-term insurance business of each member as the higher of:

1. (1)

   the member's share of the base capital resources requirement in respect of long-term insurance business for the members in aggregate; and

2. (2)

   the sum of, for each member:

   1. (a)

      the long-term insurance capital requirement; and

   2. (b)

      the resilience capital requirement.

For the purposes of GENPRU 2.3.7R (1), the Society must determine the member's share by applying to the aggregate long-term business base capital resources requirement the ratio of the result for the member of GENPRU 2.3.7R (2) to the aggregate of the results of GENPRU 2.3.7R (2) for all members.

The amount of the base capital resources requirement for the members in aggregate is:

1. (1)

   for general insurance business, €3.2 million; and

2. (2)

   for long-term insurance business, €3.2 million.

For the purposes of GENPRU 2.1.34 R, the Society must calculate the general insurance capital requirement for the members in aggregate as the higher of:

1. (1)

   the aggregate for all members of the higher of, for each member, the result of the premiums amount and the claims amount; and

2. (2)

   the brought forward amount.

The Society must determine the general insurance capital requirement for each member by apportioning the result of GENPRU 2.3.10 R between members on a fair and reasonable basis, provided that the general insurance capital requirement for a member must not be less than the higher of the result of the premiums amount and the claims amount for that member.

The Society must calculate the general insurance capital requirement it would have to determine under GENPRU 2.1.34 R if it were an insurer carrying on all the general insurance business carried on by its members, but eliminating inter-syndicate reinsurance (the Society GICR).

The Society must determine each member's share of the Society GICR by allocating the Society GICR between the members in proportion to the result for each member of GENPRU 2.3.11 R.

Subject to GENPRU 2.3.18 R, GENPRU 2.3.19 R and GENPRU 2.3.21 R, GENPRU 2.2 applies to managing agents and to the Society in accordance with:

1. (1)

   for managing agents, INSPRU 8.1.4 R; and

2. (2)

   for the Society, INSPRU 8.1.2 R.

GENPRU 2.2.32 R to GENPRU 2.2.41 R (Limits on the use of different forms of capital) do not apply to managing agents.

GENPRU 2.2.32 R to GENPRU 2.2.41 R (Limits on the use of different forms of capital) do apply to the Society with respect to:

1. (1)

   the capital resources requirements for the members in aggregate; and

2. (2)

   the aggregate capital resources supporting the insurance business of all the members.

GENPRU 2.2.74 R does not apply to the Society or to managing agents.

In this section (GENPRU 2.3), "the aggregate capital resources supporting the insurance business of all the members" are:

1. (1)

   the aggregate of all the members' capital resources calculated under GENPRU 2.3.25 R; and

2. (2)

   the Society's capital resources excluding callable contributions.

The capital resources table applies with the modifications that:

1. (1)

   Core tier one capital includes Lloyd's members' contributions in accordance with GENPRU 2.3.34 R, subject, in the case of letters of credit, guarantees and verifiable sums arising out of life assurance policies, to compliance with GENPRU 1.5.8 G to GENPRU 1.5.12 R; and

2. (2)

   the Society may also recognise and value callable contributions, pursuant to GENPRU 2.3.24 R.

In calculating its capital resources, the Society may, subject to GENPRU 1.5.13 R to GENPRU 1.5.14 R, recognise and value callable contributions.

The Society must calculate each member's capital resources as the sum of:

1. (1)

   a member's proportionate share of the capital resources held at syndicate level for each syndicate in which the member participates; and

2. (2)

   the value of a member's funds at Lloyd's after deducting liabilities in compliance with GENPRU 1.5.18 R.

In order to comply with GENPRU 2.1.13 R the Society must ensure at all times that:

1. (1)

   each member's capital resources requirement is covered by:

   1. (a)

      that member's capital resources, calculated according to GENPRU 2.3.25 R; and

   2. (b)

      to the extent that (a) is insufficient, by the Society's own capital resources; and

2. (2)

   the Society GICR is covered by the aggregate capital resources supporting the insurance business of all the members.

For the purposes of GENPRU 2.3.26R (1)(b), the Society must maintain at all times capital resources sufficient to meet the aggregate of, for each member, the amount, if any, by which the member's capital resources fall short of the member's capital resources requirement.

The Society must calculate each member's share of the amount of capital resources required to comply with GENPRU 2.2.33 R as the higher of:

1. (1)

   1/3 of the long-term insurance capital requirement for the members in aggregate; and

2. (2)

   the base capital resources requirement;

allocated between the members in proportion to the result for each member of GENPRU 2.3.7R (2).

For the purposes of GENPRU 2.2.34 R, the Society must ensure that the aggregate capital resources supporting the insurance business of all the members meet the higher of:

1. (1)

   1/3 of the general insurance capital requirement for the members in aggregate;

2. (2)

   1/3 of the Society GICR; and

3. (3)

   the base capital resources requirement;

with the sum of the items listed in GENPRU 2.2.34 R.

The Society must calculate each member's share of the amount of capital resources required to comply with GENPRU 2.2.34 R as the higher of:

1. (1)

   1/3 of the general insurance capital requirement for the members in aggregate;

2. (2)

   1/3 of the Society GICR; and

3. (3)

   the base capital resources requirement;

allocated between the members in proportion to the result for each member of GENPRU 2.3.11 R.

A Lloyd's member's contribution may be included in tier one capital resources to the extent that:

1. (1)

   the proceeds are immediately and fully available in respect of the member's insurance business at Lloyd's;

2. (2)

   (except in relation to letters of credit), it complies with GENPRU 2.2.64R (3) or cannot be repaid to a member until all of the member's liabilities in respect of its insurance business at Lloyd's have been extinguished, covered or reinsured by an approved reinsurance to close;

3. (3)

   it otherwise complies with GENPRU 2.2.64R (5) to GENPRU 2.2.64R (10).

GENPRU 2.2.256 R (Adjustment for regulated related undertakings other than insurance undertakings) applies to the Society with the modification that the Society must also value its insurance undertakings in accordance with GENPRU 2.2.256 R.

If a related undertaking is an insurance undertaking which has a deficit in the capital resources available to cover its capital resources requirement, the Society must make provision for:

1. (1)

   its proportionate share of that deficit; or

2. (2)

   in the case of a subsidiary undertaking, the whole of that deficit.

In the case of members, Lloyd's members' contributions are included in GENPRU 2 Annex 7 and include:

1. (1)

   letters of credit;

2. (2)

   guarantees; and

3. (3)

   verifiable sums arising out of life assurance policies;

held as funds at Lloyd's.