Finality At Long Last For Lloyd's Names - The Equitas Part VII Transfer

 
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The High Court recently approved a landmark statutory transfer

under Part VII of the Financial Services and Markets Act 2000

("FSMA"), the largest and most significant of its kind to

date, that will bring finality to members of Lloyd's with 1992

and prior liabilities.

On 30 March 2007, Equitas Limited ("Equitas") and

others agreed a run-off reinsurance contract with National

Indemnity Company ("National Indemnity"), a member of the

Berkshire Hathaway Group of companies, under which National

Indemnity provided US$5.7 billion of reinsurance coverage to

Equitas in excess of Equitas' adjusted reserves as at 31 March

2006. At the same time, Equitas Management Services Limited was

transferred into the Berkshire Hathaway Group and renamed Resolute

Management Services Limited, with responsibility for the run-off of

the liabilities reinsured by Equitas as agent for the Names.

The second phase of the transaction involved:

the transfer of all 1992 and prior year non-life business

underwritten at Lloyd's by open and closed year Names to

Equitas Insurance Limited, a newly formed FSA authorised insurance

company within the Equitas Group, using the insurance business

transfer provisions of Part VII of FSMA; and

the purchase by Equitas of a further US$1.3 billion of

reinsurance coverage from National Indemnity to cover the

liabilities to be transferred to Equitas Insurance Limited.

On 25 June 2009, Mr Justice Blackburne, sitting in the Companies

Court of the Chancery Division, made an order approving the

statutory transfer. As evinced by the judgment released on 7 July

20091 , the judge had no doubt that it was appropriate

to sanction the scheme.

The Part VII transfer, the largest such transfer of insurance

business to date, covers all business reinsured by Equitas

Reinsurance Limited at the time of Lloyd's Reconstruction and

Renewal in 1996, and includes the business of the PCW syndicates

reinsured by Lioncover Insurance Company Limited and the business

of the Warrilow syndicates reinsured by Centrewrite Limited.

With effect from 30 June 2009, Equitas Insurance Limited will

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