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