Determination of liabilities

Part

LLD Lloyd's

Chapter

Determination of liabilities

Printed on: 09/05/2025

Rulebook at: 01/07/2005

LLD 12

Determination of liabilities

LLD 12.1

Application and purpose

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Application

LLD 12.1.1

This chapter applies to the Society.

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LLD 12.1.2

A contravention of the rules in this chapter does not give rise to a right of action by a private person under section 150 of the Act (Actions for damages) and each of those rules is specified under section 150(2) of the Act as a provision giving rise to no such right of action.

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Purpose

LLD 12.1.3

These requirements provide safeguards against the risk that insurance liabilities will be underestimated (see also LLD 9.1.4 G).

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LLD 12.1.4

Under LLD 9.4.1 R, subject to LLD 9 to LLD 15, the insurance accounts rules and generally accepted accounting practice apply to the valuation of assets and the determination of liabilities.

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LLD 12.3

Members' liabilities

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LLD 12.3.1

At stage (e) of PRU 2.2.14 R the Society must deduct from a member's capital resources a negative valuation difference being, for each member, (for open syndicate years through which the member carries on general insurance business taken together), if A+B exceeds C, A+B-C, where:

(1) A is the total of the member's proportionate shares for each syndicate year of the accumulated excess of income over outgoings;
(2) B is the amount of any unpaid additional contributions the member is required to make to the funds maintained for the syndicate years by the managing agents; and
(3) C is the total of the member's proportionate shares of the liabilities net of reinsurance recoveries.

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LLD 12.3.2

For the purpose of PRU 4.2.52 G to PRU 4.2.56 G (Currency matching of assets and liabilities) and PRU 7.2.30 R (Localisation (UK firms only)), the amounts in LLD 12.3.1 R, which are intended to prevent the premature release of profits, may be left out of account.

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