LLM1210 - Introduction to Lloyd's: capital structure: the chain of security: the Central Fund and other central assets
The Central Fund is a fund of last resort. It is a safeguard for policyholders should a member fail to meet insurance liabilities in full. Where a member has insufficient assets on an individual basis, assets in the Central Fund can be earmarked to cover that member바카라 사이트™s liabilities if it should prove necessary, at the discretion of the Council of Lloyd바카라 사이트™s.
Members are required to contribute annually to the fund by reference to their capacity (LLM1120). Special contributions may be levied from time to time. The annual contribution to the Central Fund is in addition to the annual subscription fee that members have to pay.
For 2005, members바카라 사이트™ contributions were 0.5% of capacity. In addition, for the first time in 2005, loans of 0.75% of a member바카라 사이트™s capacity were levied from the syndicate바카라 사이트™s PTFs. These loans are repayable on closure of the year of account.
When a payment is made out of the Central Fund to meet the liability of a member (that is, a 바카라 사이트˜drawdown바카라 사이트™ is made), it gives rise to a debt from the member to the Central Fund.
In 2004, the Society raised external funding from capital markets by issuing subordinated debt, in order to bolster Lloyd바카라 사이트™s central assets for solvency purposes.