Category: Lloyd's market · Reviewed by Taylor Watts, Broker · New Business · Last reviewed 2026-06-05
Funds at Lloyd’s (FAL) are the capital deposits provided by underwriting members to support their participation in Lloyd’s syndicates. FAL forms the second link in the Lloyd’s chain of security — between the syndicate-level premium trust funds and the Lloyd’s Central Fund.
Category: Lloyd’s market Also known as: FAL, Lloyd’s capital, members funds Related concepts: Names at Lloyd’s, Lloyd’s chain of security, Lloyd’s syndicate
FAL is the capital that each underwriting member is required to deposit at Lloyd’s as security for its share of the syndicate’s underwriting. The amount is determined by reference to the member’s allocated capacity and the risk-based capital required for that capacity, as calculated under the Lloyd’s Solvency II capital model.
FAL is held in trust for the discharge of the member’s underwriting liabilities. It may be drawn upon if the syndicate’s premium trust funds are insufficient to meet claims and the member is unable to meet a cash call. Permitted forms of FAL include cash, listed securities, letters of credit and Lloyd’s-approved investments.
FAL is governed by the Lloyd’s Members Trust Deeds and the bylaws of the Council of Lloyd’s. The PRA Insurance Rulebook’s Lloyd’s chapter incorporates FAL into the Solvency II capital framework for the market [1].
The member’s FAL is held in trust, ringfenced from the member’s other assets, and not available to the member’s general creditors. Lloyd’s may require additional FAL to be deposited at any time if the member’s allocated capacity or risk profile changes.
In practice each corporate Name calculates its FAL requirement annually under the Lloyd’s capital model, providing the required capital in approved form. The Lloyd’s Capital Model is broadly consistent with Solvency II principles, with a stressed scenario analysis used to set the capital charge.
FAL is invested in eligible assets (cash, government bonds, certain equities, certain alternatives) at the member’s discretion within Lloyd’s investment guidelines. Investment returns accrue to the member; investment losses reduce the available FAL.
In the event of poor underwriting performance the member may be required to top up FAL to maintain its capacity for the following year. Conversely, in profitable years the member may withdraw excess FAL.
An illustrative example: a corporate Name backs £100m of capacity on Lloyd’s Syndicate X with FAL of £45m calculated under the Lloyd’s capital model. The FAL is held as £15m in cash, £25m in UK gilts and a £5m bank letter of credit. Following a £30m underwriting loss for the year, the member’s FAL is debited £30m, leaving £15m available; the member must restore FAL to the required level before the next year’s underwriting can commence.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-05. Next review: 2026-12-05.
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