Explanatory note
(This note is not part of the Regulations)
Regulation 3(1) substitutes for regulation 3 of the 1983 Regulations a new regulation which—
retains the previous requirement for the members of Lloyd’s taken together to maintain a global margin of solvency (paragraph (5)(a) read with Schedule 1 to the 1983 Regulations);
introduces a requirement upon them to maintain an additional, combined margin of solvency, arrived at by aggregating the prescribed surpluses of all members, calculated in accordance with a new Schedule 1A (paragraph (5)(b)); and
provides that in determining whether the combined margin of solvency is maintained, the assets and liabilities of members are to be aggregated, except that no account is to be taken of the assets of any member to the extent that they exceed his prescribed surplus (paragraph (7)).
In addition, paragraph (4) of the new regulation 3 requires that for the purposes of deciding whether either the global or the combined margin of solvency is maintained, the value of the assets and the amount of the liabilities of the members of Lloyd’s taken together are to be determined on a basis approved by the Secretary of State. This will include any provisions required in relation to coinsurance operations (and regulation 63 of, and Schedule 13 to, the Insurance Companies Regulations 1994 are accordingly disapplied).
Regulation 3(2) and Schedule 1 introduce the new Schedule 1A to the 1983 Regulations which is mentioned above.
Regulation 4 and Schedule 2 amend the form of the annual statement of business of Lloyd’s as prescribed by regulation 5 of, and Schedule 3 to, the 1983 Regulations so as to reflect the new requirements introduced by regulation 3.