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Freshfields advises Lloyd’s of London on innovative £650m insurance cover transaction

Freshfields Bruckhaus Deringer (“Freshfields”) has advised Lloyd’s of London, the world’s leading marketplace for the underwriting of commercial, corporate and speciality insurance, on a landmark £650 million five-year insurance cover for its Central Fund.

The new multi-layered cover will reimburse aggregate payments from the Central Fund in excess of £600 million up to £1.25 billion, which will serve as a key component in Lloyd’s chain of security. The £650 million protection has been structured and placed by Aon. It is a layered structure supported by newly created cell company Constellation IC Limited – financed by investment bank J.P. Morgan – as well as a panel of eight reinsurers, Arch, Berkshire Hathaway, Everest Re, Hannover Re, Munich Re, RenaissanceRe, Scor and Swiss Re.

The new and unique structure will also provide increased protection for Lloyd’s customers and the market against severe tail end events and further improve the quality and financial strength of Lloyd’s balance sheet.

The Freshfields team was led by partners James Smethurst, Flora McLean and Lauren Honeyben.