First capital investor in Lloyd’s’ new UK ILS infrastructure PCC vehicle

Ontario Teachers’ Pension Plan Board, the administrator of Canada's largest single-profession pension plan, with approximately $227.7bn in net assets, has provided capital to a Lloyd’s vehicle that will provide reinsurance cover using the new UK ILS infrastructure. Lloyd’s said Ontario Teachers is the first investor to provide capital through the London Bridge Risk (LBR) Protected Cell Company (PCC). Lloyd’s said the transaction will provide reinsurance cover to a member supporting three syndicates in the Lloyd’s market: CFC Syndicate 1988, Beazley’s Syndicate 5623 and Beat’s Syndicate 1416. Coverage will start in 2021 and will be expanded in 2022, providing initial capital in excess of £100m, which is anticipated to grow over time. Burkhard Keese, CFO at Lloyd’s, said: “I am delighted to welcome major global pension investor Ontario Teachers, which is well regarded in the ILS community, as the first to utilise LBR PCC to participate in underwriting at Lloyd’s. It is a great achievement to see the PCC used, onshore in the UK, to deliver reinsurance coverage; and I am confident that this will be the first of many ILS investments into Lloyd’s as investors, members and syndicates increasingly appreciate the potential of this transformer vehicle.” Lloyd’s explained that the PCC operates under the UK Risk Transformation regulations and provides an access point for both UK and international investors, including insurance-linked securities (ILS) investors, to deploy funds in a tax-transparent way into the Lloyd’s market. Nick Jansa, Senior Managing Director, EMEA, at Ontario Teachers, said: “We invest in a range of global assets, including insurance-linked securities, and are always looking for efficient opportunities to maximise returns and increase value for our members. LBR PCC provides an innovative and efficient way to simplify our investment structures as we continue to grow our global footprint.” The three syndicates welcomed the PCC and the involvement of Ontario Teachers. Adrian Cox, CEO of Beazley Group, said: “Beazley is pleased to see the successful launch of the first LBR PCC acting as a transformer for institutional capital to access one of our most innovative underwriting portfolios. As those portfolios continue to grow over the coming years, Beazley hopes to see further users of the new UK ILS infrastructure benefiting from low-cost, efficient access to the group’s underwriting expertise.” Matt Taylor, active underwriter at CFC Syndicate 1988, said: “As a newly established syndicate, we are delighted to have been able to benefit from capital support via LBR PCC, with its pre-approved status as an onshore transformer vehicle in the UK. For a syndicate with CFC’s high-growth expectations, capital delivery mechanisms like LBR PCC, which allow simplified investor access to our unique premium portfolio, are crucial when attracting sophisticated large-scale institutional investors.” And Paul Rayner, partner at Beat Capital Partners, added: “Beat is excited to have partnered with LBR PCC in the formation funding of Syndicate 1416. Given our perpetual third-party capital outlook, LBR PCC is a strategically important innovation that allows us to efficiently connect with high-quality alternative capital partners alongside our existing capacity supporters.”

First capital investor in Lloyd’s’ new UK ILS infrastructure PCC vehicle

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