Funds at Lloyd's trust deed requirements

Deposit and Security Trust Deeds

A. Subject to paragraph C below, no member shall underwrite general business or long term business unless they have executed one or more Lloyd’s deposit trust deeds and/or Lloyd’s security and trust deeds in the respective form for the time being prescribed and pursuant to which a Lloyd’s deposit or Lloyd’s life deposit is held in accordance with these conditions and requirements. The list of the deeds is set out in [Consolidated Requirements Part 1 > Becoming a Member > Application requirements and documentation > Application Documentation – all corporate candidates].

B. Subject to paragraph 1.E in [Consolidated Requirements Part 1 > Becoming a Member > Funds at Lloyd’s > Members capital – acceptable assets > Acceptable Assets within FAL] and [2. below], a member’s Lloyd’s deposit and Lloyd’s life deposit (if any) shall comprise:

a) any sums and investments held under the terms of a Lloyd’s deposit trust deed in the prescribed form;

b) any guarantee or letter of credit, in each case in the prescribed form, provided to the Society and held under the terms of the Lloyd’s security and trust deed in the prescribed form; or

c) partly such sums and investments and partly such guarantees and letters of credit.

C. For the avoidance of doubt, a member may underwrite general business or long term business if they holds FAL in accordance with the capital requirements for general business or long term business respectively solely in the form of monies and other assets in their PRFs.

Membership & Underwriting Conditions and Requirements, Appendix 2, paragraph A2.1

Third Party Trust Deeds

A. For the purposes of paragraph [C. in Consolidated Requirements Part 1 > Becoming a Member > Funds at Lloyd’s > Members capital – provision and maintenance > Provision of capital], and with the prior consent of an Authorised Person, a Lloyd’s deposit or Lloyd’s life deposit may constitute sums and investments provided by a third party and held under the terms of a Lloyd’s Deposit Trust Deed (Third Party Deposit) in the appropriate prescribed form; 

B. Where an Authorised Person gives their consent under paragraph A, they may require any one or more of the following to be given:

a) a Third Party Funding Arrangements Questionnaire, Declaration and Deed of Undertaking in the prescribed form;

b) a Legal Opinion in the prescribed form;

c) a confirmation of financial position in the prescribed form.

Membership & Underwriting Conditions and Requirements, Appendix 2, paragraph A2.2

Interavailable Trust Deeds

A. Subject to paragraphs B and C, for the purposes of paragraph [A. in Consolidated Requirements Part 1 > Becoming a Member > Funds at Lloyd’s > Members capital – provision and maintenance > Provision of capital], and with the prior consent of an Authorised Person, a Lloyd’s deposit or Lloyd’s life deposit may constitute sums, investments, guarantees or letters of credit provided by a participant held under the terms of an interavailable deposit trust deed and/or interavailable Lloyd’s security and trust deed in the respective form for the time being prescribed whether or not the participant has open years of account and (in the case of an interavailable security and trust deed) whether or not the Guarantees or LOCs remain held on interavailable terms.

B. In the case of a successor member, the value of any FAL that have been made interavailable by a participant to the successor member under an interavailability arrangement shall be included in the calculation of the value of the successor member's FAL save to the extent that such interavailable funds are earmarked to cover any capital requirement of the participant (as calculated in accordance with paragraph [D. in Consolidated Requirements Part 1 > Becoming a Member > Funds at Lloyd’s > Members capital – provision and maintenance > Provision of capital]).

C. In relation to an interavailability arrangement within the scope of paragraph A above, with effect from 24 months from the end of the year in which closure of the last year of account of the member takes effect, the FAL of a successor member may not include a Lloyd’s deposit or Lloyd’s life deposit held on an interavailable basis between the member and the successor member. Any FAL still in place at that time shall be disregarded for the purposes of determining whether the successor member has met their capital requirement under paragraph [D. in Consolidated Requirements Part 1 > Becoming a Member > Funds at Lloyd’s > Members capital – provision and maintenance > Provision of capital].

D. Where a participant who has entered into an interavailability arrangement has no open years of account and in respect of which an instrument in the form for the time being prescribed is entered into by the Society, the effect of which is to release the participant’s obligations under an interavailable deposit trust deed or interavailable security and trust deed which relate to the member’s own underwriting business but not those which relate to the underwriting business of the successor member, the assets held subject to that trust deed shall be treated as no longer being held on interavailable terms and shall be included in the calculation of the value of the successor member’s FAL.

Membership & Underwriting Conditions and Requirements, Appendix 2, paragraph A2.3