Hello all. I was reading the case study 3 in the combined material notes, about the sale & purchase of a Lloyds managing agent. Surprisingly the solution makes no reference to the fact that the lloyds MAs do not hold the capital to support the syndicates, under normal circumstances. So when MA A buys MA B, the liabilities of the syndicate managed by B have no bearing on the shareholders of A directly--other than that the reputational risk of running a poor performing syndicate which may impact it indirectly. The members who subscribe to the syndicate(s) managed by A are separate/insulated from the shareholders of the (poor performing) syndicate managed by B. I understand that there can be exceptions: ILVs where the same company is the MA and owns the syndicate fully. If this is what is intended in the discussion, why is there no explicit explanation in the specimen solution (other than some passing comment in the build-up to the solution)? I think the solution treats the problem as that of a normal insurance company buying another and completely ignored that these are lloyd's entities. Any others feel differently or have any thoughts? cheers.
I shouldn't worry too much. The Specimen Solution is intended to be exactly that, a specimen of "a good solution in the time available", not a detailed list of all possible points that might score in an exam. As you note, the Planning section does discuss it, and even debates whether to include it in the main answer. In any case, you've shown a good understanding of the issue, so I'm sure you'd score marks for this were you to discuss it in your own solution.
