188体育

A syndicate鈥檚 鈥榗apacity鈥� is the term used to refer to the amount of premium income that a syndicate may underwrite for a year of account 鈥� that is the maximum amount of premium income, net of reinsurance premiums paid, that it may accept. The syndicate鈥檚 capacity is itself the total of the premium limits of all the syndicate鈥檚 members on that syndicate.

A member鈥檚 overall premium limit (OPL) 鈥� often referred to as the member鈥檚 capacity 鈥� is directly related to the capital they put at risk: their Funds at Lloyd鈥檚 (LLM1200).

This means that a syndicate鈥檚 capacity is directly related to the amount of the capital backing provided by its members. The syndicate should therefore have sufficient capital backing for it to meet all claims by policyholders against policies written by the syndicate.

Syndicate capacity is referred to in terms of its notional amount.

A syndicate may have 鈥榗apacity鈥� for a year of account of say 拢100m. A member may have a 10% share of that syndicate, that is, capacity on that syndicate of 拢10m. The member鈥檚 underwriting on that, and any other, syndicate is taken into account in determining the member鈥檚 capital requirement, that is, how much Funds at Lloyd鈥檚 the member must hold.

It is not unusual for premiums received net of reinsurance to fall short of a syndicate鈥檚 capacity, especially where there is plenty of capacity available in the insurance market generally.

Establishing the true legal character of syndicate capacity is difficult, given the fact that it relates to 鈥榓nnual ventures鈥� - see LLM4210.