LLM1220 - Introduction to Lloyd's: capital structure: the chain of security: solvency
It is a fundamental principle of insurance company supervision that assets must exceed liabilities by a minimum amount. This is often described as the margin of solvency. The General Insurance Manual (GIM3130) gives more details (see LLM10000).
Lloyd바카라 사이트™s has always been subject to an annual solvency test, to demonstrate that it is solvent at both the level of the market as a whole and at the level of each member. If a single individual member failed the test the market as a whole would be declared insolvent.
Between 2005 and 2007 Lloyd바카라 사이트™s is being brought within the general approach to prudential supervision that the Financial Services Authority applies to insurers, and which in turn derives from the implementation of European-wide solvency standards for non-life insurers. This regime is based on the concept of using 바카라 사이트˜risk based바카라 사이트™ formulae to arrive at 바카라 사이트˜Individual Capital Assessments바카라 사이트™ (ICAs) and 바카라 사이트˜Enhanced Capital Requirements바카라 사이트™ (ECRs). The regime is modified to take account of some of the differences between Lloyd바카라 사이트™s and other insurers, for example, the existence of the Central Fund.
Broadly, managing agents are responsible for assessing the capital needs of syndicates and the Society of Lloyd바카라 사이트™s is responsible for assessing the capital needs of members.