Equitas
Equitas is the general label given to a group of companies linked to Lloyd's of London. It was set up in 1996 specifically to reinsure liabilities that had accumulated in the syndicates at Lloyd's of London on policies written from the 1930s up to and including 1992. This business was reinsured by Equitas Reinsurance Limited, which was also appointed as run-off agent. The liabilities were retroceded to Equitas Limited, to which Equitas Reinsurance Limited has also delegated its run-off function.
The proposal to set up the structure was accepted by 90% of the 34,000 'Names' who under-wrote policies at Lloyd's, and it became mandatory for all members to reinsure their liabilities into Equitas. When it started it had £15 bn of liabilities at net present value, which were expected to take up to 40 years to settle. It also had assets amounting to 105% of the liabilities, making it the largest start-up company to date. It is not allowed to take on fresh business but it remains the largest solvent run-off reinsurer globally.
Equitas is run by directors. It is owned by trustees who hold the shares on behalf of those who reinsured their liabilities into it.
From the Company's recent press release (i.e. non POV) - 2006 (2005)
- Total assets £4,866m (£5,031)
- Total liabilities £4,866m (£5,031)
- Solvency margin 12.0% (12.2%)
The company believes its assets are adequate to pay its liabilities in full but the accounts are qualified because of the inherent uncertainty in quantifying the liabilities.
National Indemnity
National Indemnity, a subsidiary of Berkshire Hathaway provided an additional $7bn of reinsurance to Equitas. The purchase was approved by UK and US regulators. National Indemnity took over the staff and the running of Equitas, together with all its assets and liabilities, effective 2 April 2007. Equitas was renamed Resolute Management Services Limited. The deal included £90m contributed by Lloyd's. There was expected to be a small distribution to all reinsured Names, who were consulted about the deal.
Equitas sought to novate the remaining liabilities, subject to high court approval. This process could only be progressed once the law in England was changed to allow it, which was in progress at the time the deal was announced publicly.
Transfer
On June 25th 2009 Mr Justice Blackburne approved the transfer, under Part VII of the Financial Services and Markets Act 2000, of all the 1992 and prior year non-life Lloyd's liabilities of open and closed year Names to Equitas Insurance Limited (formerly "Speyford Limited").