Channel’s clients benefit from the financial strength of its Parent, SCOR, and from the Lloyd’s Chain of Security, made up as follows:
- Syndicate-level assets
- Funds at Lloyd’s
- Lloyd’s central assets
All premiums received by Channel are held in a trust fund on behalf of its policyholders. The profits from those premiums cannot be released until provisions have been made for future liabilities, which are subject to independent audit on an annual basis.
Funds at Lloyd’s
Each member at Lloyd’s must provide capital to support its underwriting and this is calculated through an Economic Capital Assessment (ECA). The member’s Fund’s at Lloyd’s reflect the ECA along with any solvency deficit or surplus. They are member specific and are held under the trusteeship of Lloyd’s of London.
100% of Channel’s capital is provided through SCOR Underwriting Limited, a 100% subsidiary of SCOR. SCOR Underwriting Limited started trading in 2002, has more than a 10 year track record as a capital provider to Lloyd’s syndicates and has Funds at Lloyd’s in excess of £300m.
Lloyd’s Central Assets
Lloyd’s of London established the Central Fund in the 1920’s and it is available at the discretion of the Council of Lloyd’s to meet any valid claim that cannot be met by a member. The Central Fund is funded through annual contributions from members (currently 0.5% of premiums for each member) and through the issuance of subordinated debt. In addition, it can be supplemented by a callable layer that equates to 3% of all members’ syndicate-level assets. At the end of 2013, Lloyd’s central assets were in excess of £3bn.
Financial Strength Ratings
SCOR’s financial strength ratings are:
- A.M. Best: A+;
- Fitch Ratings: AA-;
- Moody’s: Aa3;
- Standard & Poor’s: AA-
Standard & Poor’s has placed SCOR on positive watch.
Lloyd’s financial strength ratings are:
- A.M. Best: A (Excellent)
- Fitch Ratings: AA-
- Standard & Poor’s: A+
Fitch Ratings upgraded Lloyd’s to AA- in June 2014, allowing Channel to provide its clients with one of the highest rated forms of security available worldwide.