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2005-01-01

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2005-02-14
2005-12-31
2006-10-06

LLD 15.1 Application and purpose1

Application

LLD 15.1.1 R 01/01/2005

This chapter applies to the Society and to managing agents.1

LLD 15.1.2 R 01/12/2004

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.

Purpose

LLD 15.1.3 G 01/12/2004

The requirements in this chapter lay down a minimum level of disclosure of financial information and of transparency.

LLD 15.1.4 G 01/01/2005

This chapter requires the Society to report on the insurance business carried on by members and on the assets and liabilities of members and the Society. It also requires managing agents to report on the insurance business carried on through each syndicate they manage. Reporting at syndicate level is required to enable the Society to prepare the Lloyd's Return.1

LLD 15.1.5 G 01/01/2005

The Lloyd's Return is made annually and contains the statement required from the Society that it has maintained capital resources equivalent to its capital resources requirement under PRU 1. This does not absolve the Society from the obligation to maintain capital resources equivalent to its capital resources requirement 1 at all times.

1 1

LLD 15.1.6 G 01/12/2004

This statement of solvency is required to be supported by sufficient detail to allow the FSA to form an opinion on the adequacy of the matters stated and to evaluate other key financial data. All the information submitted as part of the Lloyd's Return will be made available for public inspection.

LLD 15.1.7 G 01/12/2004

The Lloyd's Return is based on the return required from insurers, but the format and content have been modified where necessary to reflect the special characteristics of Lloyd's.

LLD 15.1.8 G 01/12/2004

Where appropriate, the Society is also required to modify reporting to make it more like that of an insurer. This is to aid comparisons between Lloyd's and insurers.

LLD 15.2 Requirement to report to the FSA2 3

LLD 15.2.1 R 01/12/2004

The Society must report to the FSA within 6 months of the end of each financial year on its financial situation and solvency and on the whole of the insurance business carried on by members.

LLD 15.2.2 R 01/01/2005

The report in LLD 15.2.1 R must be prepared in accordance with PRU 1.3.5 R2 and this chapter.

LLD 15.2.3 R 01/12/2004

The report in LLD 15.2.1 R must include:

(1)
the Lloyd's Return which comprises a completed set of the forms set out in LLD 15 Annex 1 R, together with any statements, notes, reports or certificates required by this chapter; and
(2)
a copy of the syndicate accounts for each syndicate that is required by byelaw to prepare accounts for the financial year.

LLD 15.2.4 R 01/12/2004

The Lloyd's Return must be examined and reported on by the auditors appointed to audit the affairs of the Society.

LLD 15.2.5 R 01/12/2004

The Society must provide a printed copy of the Lloyd's Return to the FSA, with Form 9 signed by three signatories who are senior officers of the Society each duly authorised by the Council to sign the Lloyd's Return on behalf of the Society.

LLD 15.2.6 R 01/12/2004

If the FSA notifies the Society that any part of the Lloyd's Return is not in conformity with this chapter, the Society must promptly make any appropriate corrections or adjustments and if necessary re-submit the Lloyd's Return (or relevant part of it).

LLD 15.2.6A G 18/04/2002

The report referred to in LLD 15.2.1 R must be submitted in writing in accordance with SUP 16.3.7 R to SUP 16.3.10 G (see SUP 16.3.6 R).1

LLD 15.2.7 G 01/12/2004

The Society should make the report, including amendments and corrections, and amalgamated syndicate accounts available at its head office for inspection by policyholders and potential policyholders and members.

LLD 15.2.8 G 01/12/2004

The signatories that are required under LLD 15.2.5 R should where possible include the Chairman and Chief executive of the Society.

LLD 15.3 Content and form of the Lloyd's Return1

LLD 15.3.1 R 01/01/2005

In preparing the Lloyd's Return, the Society must:

(1)
complete the forms in LLD 15 Annex 1 R, subject to LLD 15 to LLD 25, following the requirements of and making the disclosures required under Appendices 9.1, 9.2, 9.3 and 9.4 of IPRU(INS), as if in the documents referred to in those Appendices references to an insurer were references to the Society and members, and adapting the requirements in those Appendices where necessary;1
1 1
(2)
complete the forms in LLD 15 Annex 1 R using standard accounting classes as set out in LLD 15 Annex 6 R where the forms require reporting by accounting class;
(3)
report treaty reinsurance general business falling in accounting classes 9 to 10 as set out in LLD 15 Annex 6 R in Forms 28 and 29 in LLD 15 Annex 1 R by reference to the categories in the underlying accounting classes; and
(4)
complete forms 13, 14, 40-60 in LLD 15 Annex 1 R for each long-term insurance business syndicate.

LLD 15.3.2 R 01/12/2004

(1)
Where a reinsurance contract in LLD 15.3.1 R (3) covers more than one underlying accounting class as set out in LLD 15 Annex 6 R it must be apportioned between accounting classes in the way that best reflects its underlying composition.
(2)
However, where the apportionment in (1) cannot be made with reasonable accuracy or without disproportionate effort, then the contract must be allocated to the accounting class as set out in LLD 15 Annex 6 R that most closely reflects its underlying composition.
(3)
Whether apportioned under (1) or allocated under (2), a consistent approach must be taken to reporting:
1. (a)
  the progress of a treaty in subsequent years; and
2. (b)
  substantially similar insurance business in subsequent years.
(4)
Where a different policy is subsequently followed a suitable explanatory note must be provided.

LLD 15.3.3 R 01/12/2004

If, during the financial year in question, the Society has agreed to, or carried out, a material connected party transaction, it must provide a brief description of that transaction by way of a supplementary note to the Lloyd's Return.

LLD 15.3.4 R 01/12/2004

The description to be provided under LLD 15.3.3 R must state:

(1)
the names of the transacting parties;
(2)
a description of the connection between the parties;
(3)
a description of the transaction;
(4)
the amounts involved;
(5)
any other elements of the transaction needed for an understanding of its effect or potential effect upon the financial position of the Society; and
(6)
amounts written off in the period in respect of debts due to or from transacting parties which are connected parties.

LLD 15.3.5 R 01/12/2004

Transactions with the same connected party may be disclosed on an aggregated basis unless separate disclosure is needed for a proper understanding of the effect of the transactions upon the financial position of the Society.

LLD 15.4 Risk groups for general insurance business

LLD 15.4.1 R 01/12/2004

The Society must for the purposes of reporting under this chapter:

(1)
classify the direct and facultive general insurance business of members according to appropriate risk groups; and
(2)
where the risks are material, complete a separate Form 34 in LLD 15 Annex 1 R for each group.

LLD 15.4.2 R 01/12/2004

The Society must not include:

(1)
policies falling within classes 14, 15, 16, 17 or 18 within the same risk group as policies falling within any other class, except that policies falling within class 14 may be included in the same risk group as policies falling within class 15; or
(2)
policies in respect of private motor car risks, within the same risk group as policies in respect of other risks falling within accounting class 2 as set out in LLD 15 Annex 6 R; or
(3)
policies in respect of comprehensive private motor car risks, within the same risk group as policies in respect of non-comprehensive private motor car risks; or
(4)
policies transferred to members by way of a transfer under section 111 of the Act (Sanction of the court for business transfer schemes), within the same risk group as other policies.

LLD 15.4.3 G 01/12/2004

In assessing what are appropriate risk groups for reporting purposes the Society should ensure where possible that:

(1)
each risk group should include only risks from within a single accounting class and in relation to a single country;
(2)
policies are not included in the same risk group where, having regard to the patterns of risk, claims incurrence and settlement patterns, it is necessary to group them separately for the purposes of applying statistical methods in calculating the provision for claims outstanding in accordance with generally accepted accounting practice; and
(3)
claims-made policies are not included in the same risk group as policies which are not claims-made policies, except:
1. (a)
  where this is not possible without disproportionate expense; and
2. (b)
  where the policies within the risk group do not exhibit materially different characteristics.

LLD 15.4.4 G 01/12/2004

Subject to LLD 15.4.2 R (1) and LLD 15.4.2 R (2) and LLD 15.4.3 G (3), the Society may in respect of any accounting class include all insurance business carried on by members in any country in any financial year as a single risk group.

LLD 15.4.5 G 01/12/2004

Notwithstanding the provisions of LLD 15.4.2 R (1) and LLD 15.4.2 R (2) and LLD 15.4.3 G (3), the Society may classify all insurance business carried on by members in any country in respect of any accounting class in any financial year as a single risk group, as long as gross premiums written for that year in respect of that insurance business are less than 5% of the world-wide gross premiums written for all accounting classes for that year.

LLD 15.4.6 G 01/12/2004

The requirements to report a separate risk group in LLD 15.4.2 R (1) do not apply where, in the case of any financial year, the gross premiums receivable for that year in respect of that risk group would be less than £1million.

LLD 15.4.7 G 01/01/2005

[deleted]1

LLD 15.4.8 R 01/12/2004

The Society must give the FSA notice of proposed changes to the definition or classification of the risk groups in LLD 15.4.1 R, sufficient to allow the FSA properly to assess the implications of the proposals.

LLD 15.5 Major treaty reinsurers

LLD 15.5.1 R 01/12/2004

The Society must, in connection with the general insurance business carried on by members, include in the Lloyd's Return a statement of major treaty reinsurers.

LLD 15.5.2 R 01/12/2004

A major treaty reinsurer is any insurance company to which in the financial year in question or any of the five preceding financial years:

(1)
in the case of proportional reinsurance, 2% or more of the gross premiums receivable in respect of general insurance business of the members in aggregate has been ceded; or
(2)
in the case of non-proportional reinsurance, 5% or more of the gross premiums receivable in respect of general insurance business has been ceded.

LLD 15.5.3 G 01/12/2004

The Society should be treated as if it were a major treaty reinsurer when inter-syndicate reinsurance in aggregate exceeds the amounts set out in LLD 15.5.2 R.

LLD 15.5.4 G 01/12/2004

The requirements of LLD 15.5.1 R, LLD 15.6.1 R and LLD 15.7.1 R may be satisfied by giving a fair view and making use of an appropriate degree of approximation. The Society may employ any reasonable methods to establish the information required.

LLD 15.5.5 G 01/12/2004

LLD 15.5.2 R and LLD 15.7.2 R should be interpreted in relation to the period in which these reporting requirements come into effect. In the first Lloyd's Return, only one financial year will be reported on, in the second Lloyd's Return, two, and so on.

LLD 15.5.6 R 01/12/2004

The statement required under LLD 15.5.1 R must include:

(1)
the full name of each major treaty reinsurer;
(2)
the amount of the reinsurance premiums payable in the financial year to each such reinsurer;
(3)
whether and if so how the reinsurer was connected to any member or any managing agent;
(4)
the amount of any debt of each such reinsurer included at line 75 of Form 13 in LLD 15 Annex 1 R;
(5)
the amount of any deposit received from each such reinsurer under reinsurance treaties included at line 31 of Form 15 in LLD 15 Annex 1 R; and
(6)
the reinsurers' share of technical provisions shown on Form 13 in LLD 15 Annex 1 R, except that in respect of claims incurred but not reported, such recoveries need only be included to the extent that they are in respect of specific occurrences for which provisions have been allocated;

or, as the case may be, a statement that having aggregated the reinsurance ceded by members no reinsurer is a major treaty reinsurer.

LLD 15.6 Major facultative reinsurers

LLD 15.6.1 R 01/12/2004

The Society must, in connection with the general insurance business carried on by members, include in the Lloyd's Return a statement of major facultative reinsurers.

LLD 15.6.2 R 01/12/2004

A major facultative reinsurer is an insurance company to which or with respect to which:

(1)
0.5% or more of the gross premiums receivable in respect of general insurance business of the members in aggregate has been ceded; or
(2)
the addition of the amounts in items (4) and (5) of LLD 15.5.6 R produces an amount exceeding 1% of the aggregate gross assets of members.

LLD 15.6.3 G 01/12/2004

The Society should be treated as if it were a major facultative reinsurer when inter-syndicate reinsurance in aggregate exceeds the amounts set out in LLD 15.6.2 R.

LLD 15.6.4 R 01/12/2004

The statement required under LLD 15.6.1 R must include the matters listed in LLD 15.5.6 R, with appropriate amendments.

LLD 15.7 Major reinsurance cedants

LLD 15.7.1 R 01/12/2004

The Society must, in connection with the general insurance business carried on by members, include in the Lloyd's Return a statement of major reinsurance cedants.

LLD 15.7.2 R 01/12/2004

A major reinsurance cedant is an insurance company which in the financial year in question or any of the three preceding financial years:

(1)
cedes an amount which exceeds 5% of the gross premiums receivable by members in respect of general insurance business accepted under reinsurance treaties; and
(2)
cedes an amount which exceeds 2% of the gross premiums receivable by members in respect of general insurance business.

LLD 15.7.3 G 01/12/2004

The Society should be treated as if it were a major reinsurance cedant when inter-syndicate cessions in aggregate exceed the amounts set out in LLD 15.7.2 R.

LLD 15.7.4 R 01/12/2004

The statement required under LLD 15.7.1 R must include the matters listed in LLD 15.5.6 R, with appropriate amendments.

LLD 15.8 Additional information 1

LLD 15.8.1 R 01/01/2005

Derivative contracts

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

(1)
any byelaws and guidelines issued by the Society governing the use of derivative contracts;
(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)
the extent to which members were during the financial year a party to any contracts of the kind described in (2);
(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)
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)
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)
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)
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
1
(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.

LLD 15.8.2 G 01/12/2004

In relation to required disclosures of derivative contracts in LLD 15.8.1 R, references to a derivative contract and related expressions should be taken to include:

(1)
any derivative contract entered into by a managing agent on behalf of a member as part of that member's insurance business; and
(2)
any derivative contract entered into by the Society.

LLD 15.8.3 G 01/12/2004

Contracts that are quasi-derivative contracts should be treated as derivative contracts.

LLD 15.8.4 R 01/12/2004

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

(1)
a contract for differences; or
(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.

General insurance business ceded

LLD 15.8.5 R 01/01/2005

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

(1)
of each major treaty reinsurer and major facultative reinsurer; and
(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.
1

LLD 15.8.6 G 01/12/2004

The requirements of LLD 15.8.5 R may be satisfied by giving a fair view and may make use of an appropriate degree of approximation. The Society may employ any reasonable methods to establish the information required. The Society may also include such explanation as it considers to be necessary to allow a reasonable interpretation to be put on this statement.

The Society

LLD 15.8.7 R 01/12/2004

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

(1)
on the Council;
(2)
as Chairman of the Council; and
(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.

Capacity controlled

LLD 15.8.8 R 01/12/2004

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.

LLD 15.8.9 R 01/12/2004

To control a significant share means:

(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)
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)
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.

LLD 15.8.10 G 01/12/2004

The statement in LLD 15.8.8 R should include comparative figures for the preceding two financial years and should state:

(1)
the name of the managing agent, members' agent or member;
(2)
the amount of capacity owned, directed or managed in each case;
(3)
the names of the connected persons (if any); and
(4)
their respective shares.

LLD 15.9 Certificates and audit report1

Certificates

LLD 15.9.1 R 01/01/2005

The Society must annex to the Lloyd's Return:

(1)
a certificate from the Council, including the statements required by LLD 15 Annex 2 R;
(2)
a statement from the Lloyd's actuary, including the statements required by LLD 15 Annex 3 R;
(3)
a certificate from the syndicate actuary of each syndicate which carries on long-term insurance business, including the statements required by LLD 15 Annex 4 R, and;
(4)
an abstract from the syndicate actuary of each syndicate which carries on long-term insurance business of the actuary's report made under SUP 4.6.14 G1.
1

Audit report

LLD 15.9.2 R 01/12/2004

The Society must ensure that the Lloyd's Return and every document annexed to or provided with it has been examined by the Society's auditors and must provide with the Lloyd's Return an audit certificate in respect of that examination.

LLD 15.9.3 R 01/12/2004

The certificate in LLD 15.9.2 R must be in the form set out in LLD 15 Annex 5 R.

LLD 15.10 The Lloyd's global account

LLD 15.10.1 R 01/12/2004

The Society must prepare a global account in respect of each financial year that amalgamates all syndicate accounts for that year.

LLD 15.10.2 R 01/04/2003

The global account must be prepared and submitted to the FSA within six months of the end of the financial year and state that it is prepared in compliance with regulation 4 of the Insurance Accounts Directive (Miscellaneous Insurance Undertakings) Regulations 1993 (SI 1993/3245).2

LLD 15.10.3 R 01/12/2004

The notes to the global account must include details of:

(1)
inter-syndicate insurance business, including premiums received or receivable and claims paid;
(2)
the method by which run-off claims are taken into account;
(3)
the method by which the premium income limits of members are calculated; and
(4)
the bases and methods used in the calculation of technical provisions for long-term insurance business.

LLD 15.10.4 R 01/12/2004

The notes to the global account must state:

(1)
the aggregate amount of members' qualifying assets and how that is divided between:
1. (a)
  Lloyd's deposits;
2. (b)
  personal reserve funds;
3. (c)
  special reserve funds; and
4. (d)
  other qualifying assets;
(2)
the aggregate amount of the central assets and how that is divided between:
1. (a)
  the net assets of the Central Fund; and
2. (b)
  other net central assets;
(3)
the reason why any charges to tax are not shown in the accounts and the basic rate of tax applicable to amounts of tax deducted at source; and
(4)
the estimated average rates of commission and brokerage charged by brokers.

LLD 15.10.5 R 01/12/2004

The Society must provide a printed copy of the global account to the FSA.

LLD 15.10.6 G 18/04/2002

The copy of the accounts referred to in LLD 15.10.5 R must be submitted in accordance with SUP 16.3.7 R to SUP 16.3.10 G (see SUP 16.3.6 R).1

LLD 15.11 Public disclosure

LLD 15.11.1 G 01/12/2004

The FSA will make all the documents received by it under this chapter available to the public.

LLD 15.11.2 R 01/12/2004

The Society must provide within a period not exceeding 30 days:

(1)
on demand to any member or policyholder a copy of the Lloyd's Return and the global account most recently submitted to the FSA; and
(2)
if specifically requested by a member or policyholder, a copy of any syndicate account submitted to the FSA.

LLD 15.11.3 G 01/12/2004

Copies of the Lloyd's Return, the global account and the syndicate accounts may be provided, if the applicant so requests, in electronic form.

LLD 15.11.4 G 01/12/2004

The Society may make a charge for the provision of the Lloyd's Return, the global account and of each syndicate account to cover its reasonable costs, including those of printing and postage.

LLD 15.12 Other requirements

LLD 15.12.1 G 01/12/2004

IPRU(INS) 9.38R requires the Society to make a statistical report of member's insurance business activities in EEA States.

LLD 15.13 Syndicate-level reporting

LLD 15.13.1 R 01/01/2005

Each managing agent must:

(1)
prepare a return for each financial year in respect of the insurance business carried on through each syndicate managed by it; and
(2)
provide the return in (1) to the Society as soon as practicable after the end of the financial year but in any event in time to enable the Society to report to the FSA in accordance with LLD 15.2.1 R.

LLD 15.13.2 R 01/01/2005

The Society must:

(1)
issue instructions to managing agents setting out the form and content of the return under LLD 15.13.1 R; and
(2)
issue the instructions in (1) as soon as practicable but in any event in time to enable managing agents to comply with LLD 15.13.1 R.

LLD 15.13.3 R 01/01/2005

A managing agent must annex to each return which it prepares under LLD 15.13.1 R, a certificate signed by the persons referred to in LLD 15.13.4 R, including the statements required by LLD 15.13.5 R.

LLD 15.13.4 R 01/01/2005

The certificate in LLD 15.13.3 R must be signed by:

(1)
where there are more than two directors of the managing agent, at least two of those directors and, where there are not more than two directors, all the directors; and
(2)
a chief executive, if any, of the managing agent or (if there is no chief executive) the secretary.

LLD 15.13.5 R 01/01/2005

1	The certificate in LLD 15.13.3 R must state that:
	(1)	the return has been properly prepared in accordance with the instructions referred to in LLD 15.13.2 R;
	(2)	proper accounting records have been maintained and adequate information has been obtained by the managing agent;
	(3)	an appropriate system of control has been established and maintained by the managing agent over the syndicate's transactions and records;
	(4)	in relation to the statement by the syndicate actuary of a syndicate carrying on long-term insurance business required by LLD 15.9.1 R (3):
		(a)	proper accounts and records have been maintained for the purpose of preparing the statement; and
		(b)	the information given has been ascertained in conformity with LLD 15 Annex 4 R.

LLD 15.13.6 R 01/01/2005

A managing agent must ensure for each syndicate managed by it that the return required under LLD 15.13.1 R is examined and reported on by the syndicate auditor.1

LLD 15.13.7 R 01/01/2005

A managing agent must annex to each return required under LLD 15.13.1 R an audit certificate provided by the syndicate auditor including the statements required by LLD 15.13.8 R.1

LLD 15.13.8 R 01/01/2005

1	The certificate in LLD 15.13.7 R must state:
	(1)	that in the auditors' opinion, the return has been properly prepared in accordance with the instructions referred to in LLD 15.13.2 R;
	(2)	that according to the information and explanations that the auditors have received:
		(a)	in their opinion, the certificate required to be signed in accordance with LLD 15.13.3 R (other than statements to which paragraph 1(3) relates) has been properly prepared in accordance with the instructions; and
		(b)	it was or was not unreasonable for the persons giving the certificate to have made the statements in it (other than statements to which paragraph 1(3) relates);
	(3)	the extent to which, in giving their opinion, the auditors have relied, in respect of long-term insurance business, on the work of the syndicate actuary.
2	The audit opinion required by paragraph 1 does not extend to cover information on major treaty reinsurers or major facultative reinsurers.
3	To the extent that the information and explanations they have received do not allow the auditors to express an opinion as to whether it was or was not unreasonable for the persons giving the certificate required to be signed in accordance with LLD 15.13.3 R to have made the statements therein, the auditors must add to their report such qualification, amplification or explanation as may be appropriate.1

LLD 15 Annex 1 Reporting Forms

LLD 15 Annex 1 R 01/01/2004

This annex consists only of one or more forms or templates. Forms and templates are to be found through the 'Forms' link under Useful Links section at www.fsahandbook.info or on the Handbook CD-ROM.1

LLD 15 Annex 2 Certificate by the Council (see LLD 15.9.1R(1))

LLD 15 Annex 2 R 01/12/2004

1	Subject to 5, the certificate required by LLD 15.9.1R(1) must state:
	(1)	in relation to Forms 9 to 17, 20 to 42, the supplementary notes to the forms and the statements required under LLD 15.5.1 R, LLD 15.6.1 R and LLD 15.7.1 R, LLD 15.8.1 R, LLD 15.5.5 G and LLD 15.8.8 R, that:
		(a)	the Lloyd's Return has been prepared in accordance with LLD 9 to LLD 15;
		(b)	proper accounting records have been maintained and adequate information has been obtained by the Society; and
		(c)	an appropriate system of control has been established and maintained by the Society over its transactions and records;
	(2)	that reasonable enquiries have been made by the Society for the purpose of determining whether any persons are connected for the purposes of LLD 9 to LLD 15;
	(3)	that, as applicable, the assets held by members throughout the financial year in question enabled the Society to comply with LLD 14.3.1 R (Currency matching and localisation); and
	(4)	in relation to the statement required by LLD 15.9.1 R (2) to be made by the Lloyd's actuary, that:
		(a)	for the purpose of preparing the statement, proper accounts and records have been maintained; and
		(b)	the information given has been ascertained in conformity with LLD 15.9.1 R.
2	Subject to 5, the certificate required by LLD 15.9.1 R (1) must state that the required margin has been maintained throughout the financial year in question.
3	Subject to 5, the certificate required by LLD 15.9.1 R (1) must also state in relation to the long-term insurance business carried on by members:
	(1)	that the requirements of IPRU(INS) 3.1R to 3.5R have been fully complied with and in particular that, subject to the provisions of IPRU(INS) 3.2R(3), assets attributable to long-term insurance business, the income arising, the proceeds of any realisation of such assets and any other income or proceeds allocated to the long-term insurance business fund or funds have not been applied otherwise than for the purpose of the long-term insurance business;
	(2)	that any amount payable from or receivable by the long-term insurance business fund or funds in respect of services rendered by or to any other business carried on by a member or by a person who, for the purposes of IPRU(INS) 3.4R, is connected with it or is a subsidiary undertaking of it has been determined and where appropriate apportioned on terms which are believed to be no less than fair to that fund or those funds, and any exchange of assets representing such fund or funds for other assets of the member has been made at fair market value;
	(3)	that all guarantees given by a member of the performance by a related insurer which would fall to be met by any long-term insurance business fund have been disclosed in the Lloyd's Return, and that the fund or funds on which each of those guarantees would fall has been identified in it;
	(4)	that the return in respect of long-term insurance business is not distorted by agreements between the members concerned or by any arrangements which could affect the apportionment of expenses and income; and
	(5)	that IPRU(INS) 3.5R has been fully complied with.
4	Subject to 5, where the Council is satisfied that:
	(1)	the systems of control established and maintained by managing agents complied, at the end of the financial year in question, with any relevant guidance and it is reasonable to believe that those systems continued so to comply and will continue to so comply; or
	(2)	the Lloyd's Return has been prepared in accordance with any relevant guidance; this must be so stated, by listing that guidance, in the certificate required by LLD 15.9.1 R (1).
5	Where, in the opinion of those signing the certificate, the circumstances are such that any of the statements required by 1 to 4 cannot truthfully be made, the relevant statements must be omitted.
6	Where, by virtue of 5, any statements have been omitted from the certificate this fact must be stated in a note.

LLD 15 Annex 3 Statement by the Lloyd's actuary (see LLD 15.9.1R(2))

LLD 15 Annex 3 R 01/12/2004

1	The statement required by LLD 15.9.1 R (2) must be prepared and signed by the Lloyd's actuary, and must:
	(1)	state whether, for every syndicate year in which members carry on general insurance business either:
		(a)	the syndicate actuary has provided an unqualified opinion, which:
			(i)	is in a form conforming to guidance from the actuarial bodies; and
			(ii)	confirms that the technical provisions set by the managing agent are at least equal to the syndicate actuary's best estimate; or
		(b)	the Lloyd's actuary has set the technical provisions (both gross and net of reinsurance recoveries); and
	(2)	describe any source of uncertainty in the liabilities covered by the technical provisions, which in his opinion is material to the Society as a whole:
		(a)	which any syndicate actuary mentions in his opinion; or
		(b)	which affects any syndicate year for which the Lloyd's actuary has set the technical provisions.
2	If the Lloyd's actuary has set the technical provisions for any syndicate year, the statement must include an opinion covering those technical provisions, which:
	(1)	confirms that they are at least equal to his best estimate; and
	(2)	is in a form conforming to guidance for syndicate actuaries from the actuarial bodies, modified to show:
		(a)	that he is retained by the Society and not the managing agent;
		(b)	that he, and not the managing agent, set the technical provisions; and
		(c)	separately, the technical provisions of each syndicate year covered.
3	If the Lloyd's actuary considers it necessary, such qualification, amplification or explanation as may be appropriate must be added to the statement.

LLD 15 Annex 4 R Certificate by syndicate actuary (see LLD 15.9.1R(3))

LLD 15 Annex 4 R 01/12/2004

1	The certificate required by LLD 15.9.1 R (3) to be signed by the syndicate actuary appointed to a syndicate in which members carry on long-term insurance business must state:
	(1)	whether in his opinion, proper records have been kept by the managing agent adequate for the purpose of the valuation of the liabilities of the syndicate;
	(2)	whether the sum of the mathematical reserves and the deposits received from reinsurers as shown in Form 14 constitute proper provision at the end of the financial year for the long-term insurance business liabilities where these liabilities:
		(a)	include any increase in liabilities arising from a distribution of surplus as a result of an investigation as at the end of the financial year into the financial condition of the long-term insurance business; and
		(b)	include all liabilities arising from deposit back arrangements;
		but exclude liabilities which had fallen due before the end of the financial year, other than those arising from deposit back arrangements;
	(3)	whether the liabilities have been valued in accordance with LLD 9 to LLD 15 in the context of assets valued in accordance with LLD 9 to LLD 15, as shown in Form 14;
	(4)	by way of a list, the professional guidance that has been complied with;
	(5)	whether in his opinion, premiums for contracts entered into during the financial year and the income earned on them are sufficient on reasonable actuarial assumptions, taking into account other financial resources of the members and the Society that are available for the purpose, to enable the members to meet their commitments and, in particular, to establish adequate mathematical reserves; and
	(6)	whether the amounts in Form 60 are accurate.
2	If the syndicate actuary considers it necessary, such qualification, amplification or explanation as may be appropriate must be added to the certificate.

LLD 15 Annex 5 R Auditors' report (see LLD 15.9.3R)

LLD 15 Annex 5 R 01/04/2003

1	The report required by LLD 15.9.3 R must, in addition to any statement required by section 237(2) and (3) of the Companies Act, state:
	(1)	that in the auditors' opinion, Forms 9 to 17, 20 to 42, the supplementary notes to the forms and the statements required under LLD 15.5.1 R, LLD 15.6.1 R, LLD 15.7.1 R, and LLD 15.8.1 R have been properly prepared in accordance with LLD 9 to LLD 15;
	(2)	that according to the information and explanations that the auditors have received:
		(a)	in their opinion, the certificate required to be signed in accordance with LLD 15.9.1 R (1), otherwise than in relation to statements to which paragraph 1(3) of this table relates, has been properly prepared in accordance with LLD 9 to LLD 15; and2
		(b)	subject to paragraph 1(3), it was or was not unreasonable for the persons giving the certificate to have made the statements in it (other than statements to which paragraph 1(3) relates); and2
	(3)	the extent to which, in giving their opinion, the auditors have relied:
		(a)	in respect of financial information supplied to the Society by managing agents on behalf of syndicates, on work carried out by syndicate auditors; and
		(b)	in respect of long-term insurance business carried on by members, on the certificates of the syndicate actuaries given in accordance with the requirements of LLD 9 to LLD 15 with respect to the amounts in Form 60.
2	The audit opinion required by 1(2)(a) does not extend to cover the statements required under:
	(1)	LLD 15.8.5 R and LLD 15.8.8 R; and
	(2)	LLD 15 Annex 2 R 1(4), but only in so far as it relates to relevant guidance which either states that compliance with the guidance need not be audited or which relates to controls with respect to money laundering.
3	To the extent that the information and explanations they have received do not allow the auditors to express an opinion on whether it was or was not unreasonable for the Council to have made the statement required by LLD 15 Annex 2 R 1(c) the auditors must add to their report such qualification, amplification or explanation as may be appropriate.
4	Where the auditors refer in their report or in any note attached to their report to any uncertainty, the report must state whether, in the auditors' opinion, that uncertainty is material to determining whether the Society is able to meet the solvency requirements of LLD 9 to LLD 15.

LLD 15 Annex 6 R Accounting classes (see LLD 15.3.1R(2))

LLD 15 Annex 6 R 01/12/2004

1	For the purposes of LLD 9 to 15, the accounting classes for general insurance business are those set out in the following table:

Accounting class	Description	Corresponding classes of general insurance business
1	Accident and health	1 (other than 1(p) and 2
2	Motor	1(p), 3 and 10
3	Aviation	1(p), 5 and 11
4	Marine	1(p), 6 and 2
5	Transport	7
6	Property	4, 8, and 9
7	Third-party liability	13
8	Miscellaneous and pecuniary loss	14, 15, 16, 17 and 18
9	Non-proportional treaty
10	Proportional treaty
11	Marine, aviation and transport treaty

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