- 4 - many syndicates. Names agree to accept a predetermined percentage of all risks underwritten on behalf of the syndicates. Where total insurance claims are less than the premiums collected plus investment income, Names make a profit commensurate with the percentage that they agreed to underwrite. However, where claims exceed premiums collected plus investment income, Names must cover their percentage of the loss. Names have a certain capacity of premiums that they can underwrite for a given year. A Name’s usual capacity is from �200,000 to �2 million. In order to be accepted by Lloyd’s, a Name must demonstrate his/her ability to cover potential losses, a.k.a., “show means”. A Name generally may show means by posting cash, assets, or a letter of credit equal to at least 30 percent of his/her underwriting capacity with Lloyd’s. Petitioner’s Underwriting Activities Beginning in the 1960's, petitioner invested in stock. In 1988, to secure a letter of credit, petitioner transferred his stock portfolio (pledged stock) to a brokerage account at Bank Julius Baer (BJB), a London-based bank. During 1992 and 1993, petitioner underwrote �500,000 of Lloyd’s premiums which were secured by a letter of credit from BJB in the amount of �150,000. During those years, a number of the syndicates in which petitioner participated incurred losses. In order to cover thosePage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: May 25, 2011