UK regulators approve Lloyd's of London ILS vehicle

The U.K. Prudential Regulation and Financial Conduct authorities have approved a new insurance special-purpose vehicle set up by Lloyd's of London Ltd. to attract new types of investors.

The vehicle, called London Bridge Risk PCC Ltd., was established under the U.K.'s protected cell company, or PCC, legislation, which was part of a regime that came into force in December 2017 to enable the creation of U.K.-domiciled insurance-linked securities, or ILS.

Lloyd's said the new entity will allow U.K. and international investors, including ILS investors, to deploy funds into the insurance and reinsurance market "in a tax transparent way." Lloyd's members will be able to attract new classes of investors, such as pension funds, and benefit from reduced setup times and lower transaction costs, the market said.

The new vehicle is part of the Future at Lloyd's modernization plan, outlined in Blueprint One and Blueprint Two.

"ILS investment is not new to Lloyd's, but this is the first time that a U.K. PCC has been set up as a platform to allow investors to back and provide capital to members at Lloyd's," CFO Burkhard Keese said in a statement.

Lloyd's has long aspired to attract market-wide ILS investment. In January 2018, then-CFO John Parry said the market was considering using ILS money to diversify its capital base. However, Parry said in September of the same year that the plans had been put on hold because of time pressures and Brexit.