The Insurers (Reorganisation and Winding Up) (Lloyd's) Regulations 2005
2005 No. 1998
INSOLVENCY
The Insurers (Reorganisation and Winding Up) (Lloyd's) Regulations 2005
Made 19th July 2005
Laid before Parliament 20th July 2005
Coming into force 10th August 2005
The Treasury being a government department designated1for the purposes of section 2(2) of the European Communities Act 19722in relation to the insolvency of insurers, in exercise of the powers conferred by that section hereby make the following Regulations:
PART 1
GENERAL
Citation and commencement
1. These Regulations may be cited as the Insurers (Reorganisation and Winding Up) (Lloyd's) Regulations 2005, and come into force on 10 August 2005.
Interpretation
2.—(1) In these Regulations—
“the Administration for Insurers Order” means the Financial Services and Markets Act 2000 (Administration Orders Relating to Insurers) Order 20023;
“affected market participant” means any member, former member, managing agent, members' agent, Lloyd’s broker, approved run-off company or coverholder to whom the Lloyd’s market reorganisation order applies;
“approved run-off company” means a company with the permission of the Society to perform executive functions, insurance functions or administrative and processing functions on behalf of a managing agent;
“the association of underwriters known as Lloyd's” has the meaning it has for the purposes of the First Council Directive of 24 July 1973 on the coordination of laws, regulations and administrative provisions relating to the taking and pursuit of the business of direct insurance other than life assurance ( 73/239/EEC)4and Directive 2002/83/ECof the European Parliament and of the Council of 5 November 2002 concerning life assurance5;
“central funds” means the New Central Fund as provided for in the New Central Fund Byelaw (No. 23 of 1996)6and the Central Fund as provided for in the Central Fund Byelaw (No. 4 of 1986);
“company” means a company within the meaning of section 735 of the 1985 Act or Article 3 of the Companies Order or a company incorporated elsewhere than in Great Britain that is a member of Lloyd's;
“corporate member” means a company admitted to membership of Lloyd’s as an underwriting member;
“coverholder” means a company or partnership authorised by a managing agent to enter into, in accordance with the terms of a binding authority, a contract or contracts of insurance to be underwritten by the members of a syndicate managed by that managing agent;
“former member” means a person who has ceased to be a member, whether by resignation or otherwise, in accordance with Lloyd’s Act 19827and any byelaw made under it or in accordance with the provisions of Lloyd’s Acts 1871 – 1982 then in force at the time the person ceased to be a member;
“Gazette” means the London Gazette, the Edinburgh Gazette and the Belfast Gazette;
“individual member” means a member or former member who is an individual;
“insurance market activity” has the meaning given by section 316(3) of the 2000 Act;
“insurance market debt” means an insurance debt under or in connection with a contract of insurance written at Lloyd's;
“Lloyd’s Acts 1871-1982” means Lloyd’s Act 18718, Lloyd’s Act 19119, Lloyd’s Act 195110and Lloyd’s Act 1982;
“Lloyd’s broker” has the meaning given by section 2(1) of Lloyd’s Act 1982;
“managing agent” has the meaning given by article 3(1) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 200111;
“member” means an underwriting member of the Society;
“members' agent” means a person who carries out the activity of advising a person to become, or continue or cease to be, a member of a particular Lloyd’s syndicate;
“overseas business regulatory deposit” means a deposit provided or maintained in respect of the overseas insurance and reinsurance business carried on by members in accordance with binding legal or regulatory requirements from time to time in force in the country or territory in which the deposit is held;
“overseas insurance business” means insurance business and reinsurance business transacted by members in a country or territory that is not or is not part of an EEA State;
“the principal Regulations” means the Insurers (Reorganisation and Winding Up) Regulations 200412;
“relevant trust fund” means any funds held on trust under a trust deed entered into by the member in accordance with the requirements of the Authority and the Byelaws of the Society for the payment of an obligation arising in connection with insurance market activity carried on by the member or for the establishment of a Lloyd’s deposit and includes funds held on further trusts declared by the Society or the trustee of such a trust deed in respect of any class of insurance market activity;
“the Room” has the meaning given by section 2(1) of Lloyd’s Act 1982;
“the Society” means the Society incorporated by Lloyd’s Act 1871;
“subsidiary of the Society” means a company that is a subsidiary of the Society within the meaning of section 736 of the 1985 Act or Article 4 of the Companies Order;
“syndicate” has the meaning given by article 3(1) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.
(2) Subject to paragraph (3), words and phrases used in these Regulations have the same meaning as in the principal Regulations except where otherwise specified or where the context requires otherwise.
(3) For the purposes of these Regulations, “UK insurer” is to be treated as including a member or a former member.
(4) These Regulations have effect notwithstanding the provisions of section 360 of the 2000 Act.
PART 2
LLOYD'S MARKET REORGANISATION ORDER
Lloyd’s market reorganisation order
3.—(1) In these Regulations “Lloyd’s market reorganisation order” means an order which—
(a)
(a) is made by the court in relation to the association of underwriters known as Lloyd's;
(b)
(b) appoints a reorganisation controller; and
(c)
(c) on the making of which there comes into force a moratorium on the commencement of—
(i) proceedings, or
(ii) other legal processes
set out in regulation 8 in respect of affected market participants, the Society and subsidiaries of the Society.
(2) A Lloyd’s market reorganisation order applies to—
(a)
(a) every member, former member, managing agent, members' agent, Lloyd’s broker and approved run-off company who has not been excluded from the order in accordance with regulation 7;
(b)
(b) every coverholder who has been included in the order in accordance with regulation 7;
(c)
(c) the Society; and
(d)
(d) subsidiaries of the Society.
Condition for making order
4.—(1) The court may make a Lloyd’s market reorganisation order if it is satisfied that—
(a)
(a) any regulatory solvency requirement is not, or may not be, met; and
(b)
(b) an order is likely to achieve one or both of the objectives in regulation 5.
(2) In paragraph (1), “regulatory solvency requirement” means a requirement to maintain adequate financial resources in respect of insurance business at Lloyd's, imposed under the 2000 Act, whether on a member or former underwriting member, either singly or together with other members or former underwriting members, or on the Society and includes a requirement to maintain a margin of solvency.
(3) In paragraph (2), “former underwriting member” has the meaning given by section 324(1) of the 2000 Act.
Objectives of a Lloyd’s market reorganisation order
5. The objectives of a Lloyd’s market reorganisation order are—
(a) to preserve or restore the financial situation of, or market confidence in, the association of underwriters known as Lloyd’s in order to facilitate the carrying on of insurance market activities by members at Lloyd's;
(b) to assist in achieving an outcome that is in the interests of creditors of members, and insurance creditors in particular.
Application for a Lloyd’s market reorganisation order
6.—(1) An application for a Lloyd’s market reorganisation order may be made by the Authority or by the Society, or by both.
(2) If the application is made by only one of those bodies it must inform the other body of its intention to make the application as soon as possible, and in any event before the application is lodged at the court.
(3) The Authority and the Society are entitled to be heard at the hearing of the application, regardless of which body makes the application.
(4) An application must clearly designate—
(a)
(a) any member, former member, managing agent, members' agent, Lloyd’s broker, or approved run-off company to whom the order should not apply; and
(b)
(b) every coverholder to whom the order should apply.
(5) The applicant must give notice of the application by—
(a)
(a) ensuring the posting of a copy in the Room,
(b)
(b) displaying a copy on its website, and
(c)
(c) publishing a copy
(i) in the Gazette, and
(ii) in such newspaper or newspapers within the United Kingdom and elsewhere as the applicant considers appropriate to bring the application to the attention of those likely to be affected by it.
(6) The notice must be given as soon as reasonably practicable after the making of the application, unless the court orders otherwise.
Powers of the court
7.—(1) On hearing an application for a Lloyd’s market reorganisation order, the court may make—
(a)
(a) a Lloyd’s market reorganisation order, and
(b)
(b) any other order in addition to a Lloyd’s market reorganisation order which the court thinks appropriate for the attainment of either or both of the objectives in regulation 5.
(2) A Lloyd’s market reorganisation order comes into force—
(a)
(a) at the time appointed by the court; or
(b)
(b) if no time is so appointed, when the order is made
and remains in force until revoked by the court.
(3) The court may on an application made by...
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