On 25 June 2009, the High Court approved the statutory transfer of the 1992 and prior non-life business of members and former members of Lloyd's to Equitas Insurance Limited by way of Part VII transfer under the Financial Services and Markets Act 2000 (FSMA).
National Indemnity Company, a member of the Berkshire Hathaway group of companies, agreed in October 2006 to reinsure all of Equitas' liabilities and took on the run-off of those liabilities. The transaction was structured to occur in two stages (i.e. reinsurance followed by a Part VII transfer), because at the time of Phase I, the existing legislation prevented all of the liabilities from being transferred.
Phase I was completed in March 2007, at which time Lloyd's made a contribution to Equitas of £72 million.
The sanction of the Part VII transfer means that all business reinsured by Equitas Reinsurance Limited at the time of Reconstructions and Renewal in 1996 has been transferred to a new company, Equitas Insurance Limited. Pursuant to the agreement with National Indemnity Company, Equitas will now buy an additional $1.3 billion of reinsurance cover.
The Part VII transfer became effective on 30 June 2009 and means that Names will achieve finality under English law in respect of their 1992 and prior years non-life Lloyd's liabilities.
As required by the FSMA, a report on the Part VII transfer has been prepared by an independent expert. Copies of the summary of the Part VII transfer scheme document and independent expert's report can be viewed by clicking here.