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HMRC internal manual

Lloyd's Manual

Introduction to Lloyd's: syndicate capacity: rights attaching to

Syndicate capacity, from the perspective of a member, is the right to underwrite on aparticular syndicate (strictly, the successor syndicate – see LLM1080) in the following year, and the right to remain for each successive year so long as that syndicate string remains in existence, or until the member sells the capacity. The member has the right to an identical figure of notional capacity in each successor syndicate.

Being on a syndicate is often referred to as being included on the syndicate’s “stamp” for a particular year.


The member also the right to a “pre-emption offer” from the managing agent ifthe successor syndicate is to be expanded in the subsequent year.

A pre-emption offer is an invitation by a syndicate to the member to increase their nominal capacity in line with the increase in a syndicate’s increase in capacity in order that the Name has proportionately the same share of the syndicate’s capacity in that subsequent year. There is no cost to taking up a pre-emption offer, but the member may be required to increase their Funds at Lloyd’s (LLM1200) in order to support the increased personal underwriting.

A member may accept all or part of a pre-emption offer and sell via the auction process (LLM1140) any part that they do not wish to take up. Alternatively they may simply decline all or part of the offer, or allow it to lapse.


For the 2002 underwriting account, Name A’s allocated capacity on syndicate 7777(2002) was £50,000. The stamp capacity of syndicate 7777(2002) was £100M. For the 2003 underwriting account, syndicate X increases its capacity by £10M to £110M. Name A has the pre-emption right to additional capacity of £10M/£100M x £50,000, i.e. £5,000 on syndicate X for the 2003 account.

If they take up that right, they will still have the same percentage share of the syndicate’s capacity.


The reverse of a pre-emption is a de-emption, where the managing agent decides (or is required by Lloyd’s) to decrease the overall capacity of the syndicate. The member has no alternative but to accept such a decision and the nominal capacity is therefore reduced, even though their percentage share of the syndicate will, all other things being equal, remain unchanged. The member would not be compensated for this reduction in nominal capacity, but it may separately lead to the release by Lloyd’s of some of the Name’s Funds at Lloyd’s (LLM1200).

A de-emption does not necessarily mean that the market value of the syndicate capacity has decreased. In fact, a de-emption may indicate that the syndicate is writing keener, more profitable, business thereby increasing the value of a share in its capacity.

Pre-emption or de-emption is not unusual, and Names may frequently adjust their portfolio of syndicate capacity from time to time too.