Market Bulletin
One Lime Street London EC3M 7HA

FROM:
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Matthew Chandler
Head of Admissions and Coverholders
86/G5
5743
14 August 2003
Y3116
ADVANCED CONSENT REGIME
Introduction of an advanced consent regime for various
types of applications previously made by managing
agents to the Admissions department.
YesManaging agents to note and use for the future.
Not applicable

In order to ease the burden on managing agents Lloyd’s is implementing, with immediate
effect, an advanced consent regime that covers application types that were previously
required to be considered by Lloyd’s. These advance consents do not affect the rights of any
member to object to a proposal made by the managing agent and in these cases full consent
may be required.
The attached document and appendices identify, for each consent type, the conditions thatmust be met in order for the advanced consent to be granted and the action to be taken by the
managing agent.
This market bulletin replaces all previous communications granting advanced consents.
Any queries regarding these advance consents should be addressed to Monique Alder (73276754) or Anthony Hipperson (7327 5622).

Matthew Chandler
Head of Admissions and Coverholders
Risk Management

Lloyd’s is regulated by the Financial Services Authority

Advance Consents
applicable to managing agents

August 2003

Lloyd’s is regulated by the Financial Services Authority

Advance Consents
Following a review of applications the Admissions department receive, several different
types of consent have been identified as representing minimal risk to the franchise. Lloyd’s
has therefore implemented an advanced consent regime for these types of application
pursuant to paragraphs 32 and 33 of the Underwriting Byelaw.
Advance consents will allow agents that meet certain conditions to notify Lloyd’s of theiractions without the requirement for consent. This will be particularly useful for thosesyndicates with aligned capital, where the requirements for consent were introduced inbyelaws designed to protect the interests of 3rd party capital. In developing these advanceconsents the Admissions department consulted with both managing agents and members’
agents.
The following advance consents are included in this document:•

Increase in agency fees or profit commission (This advance consent applies from 2004)•

Conditional consent for agency agreement terminations (This advance consent applies
from 2004)•

Appointment of recognised accountants as auditors for a syndicate and its managing agent
or a related group company•

Multiple syndicates consent for underwriters where the additional syndicate is allocatedon a split stamp basis, is a mirror syndicate or in run-off•

Appointment and retirement of premiums trust fund trustees that are directors or company
secretary of the managing agency•

Consent not to hold a syndicate annual general meeting•

Existing advanced consents:•

Reinsurance to close being treated as a transfer of assets following the mergerof syndicates.

•

Appointment of a director of a corporate member

Each of the attached appendices detailing the advanced consent regime is divided into 4 main
sections:
Advance Consent – This section describes what the advance consent is and what managing
agents are allowed to do when using it. Where applicable it also sets out conditions that must
be met before the advance consent can be used.
Lloyd’s Requirements – This section details the byelaw, and relevant paragraph, that theadvance consent is associated with.
Procedure – The procedure section details the steps the managing agent must go through inorder to qualify for an advanced consent, including the conditions that must be met. Where
applicable this section is divided between aligned and non-aligned syndicates.
Notes – Where appropriate, any further notes regarding the advance consent.

Notification to members
Where approval is required from members, managing agents should observe the following
procedure:•Consultation– prior to submitting the formal notification managing agents should
discuss with members’ agents and direct corporate participants the application to be
made;

•

Consultation Period – all members should be given a period of consultation as set out inthe relevant byelaw requirements in order to consider the proposal and raise objections
where appropriate.

In all circumstances where consultation with members is required the Admissions department
should be sent a copy of the application at the same time as it is sent to members andmembers’ agents.
All letters to members and members’ agents must indicate that the Admissions department
should be contacted directly if there are any objections.
Objections from members and members’ agents
In circumstances where members and members’ agents object to a proposal by a managing
agent the Admissions department should be consulted immediately. If the objection cannot beeasily resolved it may not be possible for the agent to take advantage of the advanced consent
and a full formal application for consent would be required.
Notification to Lloyd’s
In all circumstances where an agent uses an advanced consent Lloyd’s must be notified inwriting within 10 working days. Notification must include confirmation of the advanceconsent used and, where applicable, that no objections were raised. This notification can be in
the form of a letter or an email sent to admissions@lloyds.com with a subject line of‘Advance Consent’.
Revocation of Advance Consents
Lloyd’s reserves the right to revoke any advance consents that have been granted, and to stop
the use of specific advance consents, for a single managing agent or the community as awhole.
Any queries regarding the advance consents included in this document should be directed to
the Admissions department.

Appendix 1

Increases in Agency Fees or Profit Commission
This advance consent applies from 1st January 2004

Advance consent:

Exemption from the requirement for managing agents and syndicates toseek Lloyd’s consent to increase fees or profit commission.

Lloyd’s requirements:

Agency Agreements Byelaw (No. 8 of 1998), Paragraph 11B

Procedure for aligned
syndicates:

Proposal to be agreed with the board of eachcorporate member participating in the syndicate.

Managing agent of the syndicate to notify Lloyd’s
Admissions department and Members Services Unitin writing of the increase in fees or profit commission.

Procedure for nonaligned syndicates:
All members are to be notified of the syndicate’s intention
to increase fees in accordance with the requirements ofparagraph 11B of the Agency Agreements Byelaw andapplicable market bulletin(s).
The application shall include inter alia:•

details of proposed increase in fees and impact oneach member in monetary and percentage terms;•

statement of business and/or commercial case forincrease; and•any additional information the agent considers to be
relevant to the application.

Decision to increase fees to be taken only when the 21 days
allowed for responses have elapsed and no objections havebeen received from any member.

Managing agent of the syndicate to notify Lloyd’s
Admissions department and Members Services Unitin writing of the increase in fees or profit commission.

Lloyd’s is regulated by the Financial Services Authority

Appendix 2

Conditional Consent for Agency Agreement Termination
This advance consent applies from 1st January 2004

Advance consent:

Lloyd’s requirements:
Procedure for aligned
syndicates:

Exemption from requirement to seek conditional consent to terminate
the agency agreement for agencies wishing to:•increase fees or profit commission; or•

effect a syndicate merger; or•

obtain conditional consent for a minority buyout.

Agency Agreements Byelaw (No. 8 of 1998), Paragraph 11B

Proposal to be agreed with the board of eachcorporate member participating in the syndicate.

Managing agent of the syndicate to notify Lloyd’s
Admissions department in writing of the decision
to terminate agency agreement.

Procedure for nonaligned syndicates:
All members are to be notified of the syndicate’s intention toterminate the managing agents agreement in accordancewith paragraph 11B of the Agency Agreements Byelaw andapplicable market bulletin(s).

Decision to terminate agency agreement to be taken only
when the 21 days allowed for responses have elapsed and no
objections have been received from any member.

Managing agent of the syndicate to notify Lloyd’s
Admissions department in writing of the decision
to terminate the agency agreement.
Notes:In respect of syndicate mergers and minority buyouts this consent isconditional only. Any application to complete a syndicate merger orminority buyout must still be made in accordance with the requirementsof the Major Syndicate Transactions Byelaw.

Lloyd’s is regulated by the Financial Services Authority

Appendix 3

Appointment of Recognised Accountant as Auditors
Advance consent:

Exemption from requirement for managing agents to seek consent for
the appointment of a recognised accountant as auditor of the managing
agent, syndicate and / or any related parties.

Lloyd’s requirements:

Audit Arrangements Byelaw (No. 7 of 1998), Paragraph 14A

Procedure for aligned
syndicates:

Proposal to be agreed with the board of eachcorporate member participating in the syndicate.

Managing agent of the syndicate to notify Lloyd’s Admissions
department in writing of the authorised accountant to beappointed as auditor.
Procedure for nonaligned syndicates:

All members are to be informed of the syndicate’s intention
to appoint an authorised accountant as auditor, including
details of any other group company the auditor acts for, in
accordance with the Audit Arrangements Byelaw andconditions and requirements prescribed under that byelaw.
Notification to include details on any conflict of interest that
may arise from the appointment and the strategy of the
managing agent in managing this conflict.

Decision to appoint auditor to be taken only when the 21 days
allowed for responses have elapsed and no objections havebeen received from any member.

Managing agent of the syndicate to notify Lloyd’s Admissions
department in writing of the authorised accountant to beappointed as auditor.

Members reserve the right to object to the appointment of anauditor. Concerns may be raised at any time during the year
and these will be considered before the next anniversary of
the appointment.

This process must be completed annually for each syndicate.
Notes:

Any syndicate taking advantage of this advance consent and proposing
not to hold an Annual General Meeting (“AGM”) for the same year ofaccount should notify capital providers of both proposals at the sametime.

Lloyd’s is regulated by the Financial Services Authority

Appendix 4

Multiple Syndicates – Underwriters
Advance consent:

Lloyd’s requirements:
Procedure for aligned
and non-aligned
syndicates:

Exemption from requirement for managing agents and syndicates toseek consent for the appointment of an underwriter or underwriting
teams to multiple syndicates. This advance consent will only operate
where the syndicates have the same managing agent and:•the business of the additional syndicate is allocated in predetermined proportions (split stamp) and no risk is accepted by any
syndicate unless it is accepted on behalf of the other syndicates; or•the additional syndicate is a mirror syndicate with the same
members and identical participation in the syndicates; or•the additional syndicate is in run-off and the individual is alreadyapproved as a run-off manager.

Multiple Syndicates Byelaw (No. 5 of 1989), Paragraphs 4, 5 & 6

The managing agent of the syndicates must be satisfied thatno conflict of interest will arise from the appointment.

Lloyd’s Admissions department to be notified in writing,including the following points:

Notes:•

the name and job title of the underwriter(s);•date of new arrangement coming into effect;•

the status of the original syndicate(s);•the status of the additional syndicate i.e. split stamp,
mirror syndicate or run-off syndicate; and•statement that the appointment meets the conditions
as set out in the ‘Advance Consent’ section above.

Where the appointment of an underwriter, or underwriting team, tomultiple syndicates is sought as a result of a merger this consent will beconsidered as a part of the merger application.

Lloyd’s is regulated by the Financial Services Authority

Appendix 5

Appointment and Retirement of Premiums Trust Fund Trustees
Advance consent:

Lloyd’s requirements:
Procedure for aligned
and non-aligned
syndicates:

Exemption from requirement for managing agents to seek consent toappoint and remove individuals as Trustees under the Premiums Trust
Deed where:•

the individual to be appointed is a director or compliance officer;
and•the individual to be appointed is already Individually Registered;and•the managing agent has a minimum of 2 trustees and a maximumof 3 at all times; and•a fully completed and signed Deed of Appointment and Deed ofUndertaking is completed.

Premiums Trust Deed and the Underwriting Byelaw (No. 2 of 2003) andthe Underwriting Requirements prescribed under that byelaw.

Managing agent to fully complete Deed of Appointment and
Deed of Undertaking as per execution instructions andsubmit to Members’ Services Unit (“MSU”) in Chatham.
Deeds to be accompanied by a covering letter confirmingthat all criteria have been met.

MSU to check Deeds and seal where appropriate.

Original sealed Deeds to be returned to Managing Agent.
Notes:All relevant Premiums Trust Fund forms and execution instructions areavailable from MSU.
Clauses within the Deeds refer to an effective date of appointment. Thisdate must be after the date when approval is given to the appointment /retirement. To allow the approval to be processed the agent should
contact MSU to agree a date to be inserted.
In the case of the removal of a trustee, where it is not possible to obtainthe signature of a trustee who will not be continuing, for whateverreason, it will be necessary to obtain formal consent from Lloyd’s.

Lloyd’s is regulated by the Financial Services Authority

Appendix 6

Syndicate Annual General Meetings
Advance consent:

Exemption from requirement for syndicates to hold an AGM.

Lloyd’s requirements:

Syndicate Meetings Byelaw (No. 11 of 1994), Part B, Paragraph 2, andthe bulletin issued 08/12/2000, Ref: 085/2000.

Procedure for aligned
syndicates:

Proposal to be agreed with the board of eachcorporate member participating in the syndicate.

Managing agent of the syndicate to notify Lloyd’s Admissions
department in writing of the decision not to hold an AGM.
Procedure for nonaligned syndicates:

All members are to be informed of the syndicate’s intention
not to hold an AGM in accordance with the requirements set
out in the Syndicate Meetings Byelaw and the conditions andrequirements prescribed under that byelaw.

Decision not to hold an AGM to be taken only when the 21days allowed for responses have elapsed and no objections
have been received from any capital provider.

Managing agent of the syndicate to notify Lloyd’s Admissions
department in writing of the decision not to hold an AGM.

This process must be completed annually for each syndicate.

Notes:

Any syndicate taking advantage of this advance consent and proposing
to appoint a recognised accountant as auditor for the same year ofaccount should notify members of both proposals at the same time.

Lloyd’s is regulated by the Financial Services Authority

Appendix 7

Existing Advance Consents
Reinsurance to close treated as a transfer of assets
Advance consent:

Where a merger has taken place under the Major Syndicate
Transactions Byelaw and the merger documentation confirmed that the
RITC of the ceasing syndicate(s) was to be accepted by the merged
entity. Any such RITC can be considered as a transfer of assets andthus a separate application under the Syndicate Premium Income
Byelaw need not be made.

Lloyd’s requirements:

Underwriting Byelaw (No. 2 of 2003) and the Underwriting
Requirements prescribed under that byelaw.

Summary:
Syndicate merger application is submitted to Admissions
stating that the RITC of the ceasing syndicate is to be
accepted by the newly merged syndicate.

Merger application considered by Admissions.

Managing agent informed when consent for merger has been
granted. Consent will automatically include approval of RITC
as a Transfer of Assets.

Lloyd’s is regulated by the Financial Services Authority

Appendix 8

Existing Advance Consents
Appointment of a director to the board of a corporate member
Advance consent:

Exemption from requirement for corporate members to seek consent for
the appointment of a director where that individual is alreadyindividually registered or is a director of an existing corporate member.

Lloyd’s requirements:

Membership Byelaw (No. 17 of 1993), Paragraph 14(2)(a) and thebulletin issued 12/01/2000, Ref: 005/2000

Summary:
Corporate member to notify Lloyd’s of the proposal no lessthan 7 days prior to the appointment.

Lloyd’s have 7 days in which to raise any objections.

If no objections are raised by Lloyd’s within 7 days theappointment becomes automatic.

Lloyd’s is regulated by the Financial Services Authority