The UK High Court has given approval for the first ever Part VII transfer in the Lloyd's Insurance market.
Spectrum Syndicate Management successfully carried out the transfer which will see the business written by Lloyd's Syndicate 982 transferred to Sterling Life Limited.
The deal is the first time the Lloyd's market has allowed the transfer of a syndicate's business to a company outside the market.
Traditionally finality for syndicates in run off has been delivered via a reinsurance to close contract with another Lloyd's syndicate.
However new legislation under FSMA enables business transfers between syndicates and insurance companies.
The transfer of Syndicate 982's Lloyd's business has been the first test of the new rules.
The Liabilities of the open years of syndicates in run-off across the Lloyd's market is estimated to be in excess of £7bn.
However Spectrum's chief executive Richard Murphy says the first successful Part VII will not herald a significant leap in the number of similar applications from syndicates currently in run off.
Murphy said: “This was in many respects the ideal syndicate to undertake the first part VII transfer from the Lloyd's Market. It is one of a few life syndicates and has a small number of policyholders the vast majority of which were in the UK and Europe.
“The process was a complex one. There are significant differences in terms of the transfer of a Lloyd's syndicate, and we have learned a great deal about the solutions needed to meet those particular challenges.
“The transfer will be formally made on May 26 which will give Names economic finality and draw a line under their exposure. Legal finality will be achieved in March 2007.”
Murphy added: “On a positive note we have been able to deliver a 5% return on capacity to the syndicate's Names”.
