LLD 15.8 Additional information 1

Derivative contracts

The Society must annex a statement to the Lloyd's Return comprising a brief description of:

1. (1)

   any byelaws and guidelines issued by the Society governing the use of derivative contracts;

2. (2)

   any provision in those guidelines governing the use of contracts under which members have a right or obligation to acquire or dispose of assets which was not, at the time when the contract was entered into, reasonably likely to be exercised and the circumstances in which, pursuant to that provision, such contracts may be used;

3. (3)

   the extent to which members were during the financial year a party to any contracts of the kind described in (2);

4. (4)

   the extent to which any of the amounts recorded in Form 13 would be changed if assets which members had a right or obligation to acquire or dispose of under derivative contracts outstanding at the end of the financial year (being, in the case of options, only those options which it would have been prudent to assume would be exercised) had been acquired or disposed of;

5. (5)

   the difference between (4) and the amount which would result under (4) if such options had been exercised and this were reflected in Form 13 to the maximum extent;

6. (6)

   how different the information provided pursuant to (4) and (5) would have been if, instead of applying to contracts outstanding at the end of the financial year, (4) and (5) had applied to derivative contracts outstanding at such other time during the financial year as would have changed the amounts in Form 13 to the maximum extent;

7. (7)

   the maximum loss which would be incurred by members on the failure by any one other person to fulfil its obligations under derivative contracts outstanding at the end of the financial year, both under existing market conditions and in the event of other foreseeable market conditions, together with an assessment of whether such maximum loss would have been materially different at any other time during the financial year;

8. (8)

   the circumstances surrounding the use of any derivative contract held at any time during the financial year which did not fulfil the criteria in PRU 4.3.5 R1; and

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9. (9)

   the total value of any fixed consideration received by members (whether in cash or otherwise) during the financial year in return for granting rights under derivative contracts and a summary of contracts under which such rights have been granted.

For the purposes of LLD 15.8.1 R, if members are a party to:

1. (1)

   a contract for differences; or

2. (2)

   any other contract which is to be, or may be, settled in cash

they must be treated as having a right or obligation to acquire or dispose of the assets underlying the contract.

The Society must annex to the Lloyd's Return a statement:

1. (1)

   of each major treaty reinsurer and major facultative reinsurer; and

2. (2)

   for each of the realistic disaster scenarios set by the Society when fulfilling its obligation under PRU to monitor aggregation of risk within the Lloyd's market 1of the contribution it is assumed each such reinsurer would provide in the event of that disaster occurring.

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The Society must annex to the Lloyd's Return a statement naming each individual who has served:

1. (1)

   on the Council;

2. (2)

   as Chairman of the Council; and

3. (3)

   as Chief Executive Officer of the Society;

at any time during the financial year, including in each case the dates of commencement or end of service (as the case may be) of any individual who has not served for the entire year.

The Society must annex to the Lloyd's Return a statement identifying any members, members' agents or managing agents that control a significant share of the underwriting capacity of the Society.

To control a significant share means:

1. (1)

   in relation to a managing agent, managing, directing through one or more Members' Agent Pooling Arrangements or owning, whether directly or in conjunction with connected persons, capacity which in aggregate is greater than 5% of the total underwriting capacity of the Society;

2. (2)

   in relation to a members' agent, directing through one or more Members' Agent Pooling Arrangements or owing, whether directly or in conjunction with connected persons, underwriting capacity which in aggregate is greater than 2.5% of the total underwriting capacity of the Society; and

3. (3)

   in relation to a member, owning, whether directly or in conjunction with connected persons, underwriting capacity which, in aggregate, is greater than 2.5% of the total underwriting capacity of the Society.