{"id":"F2006B00557","name":"Lloyd's Security Trust Fund Rules No 1","slug":"lloyd-s-security-trust-fund-rules-no-1","collection":"legislative_instrument","jurisdiction":"commonwealth","status":"repealed","isInForce":false,"actNumber":null,"makingDate":null,"administeringDepartment":null,"currentVersion":{"id":40707,"registerId":"commonwealth-F2006B00557-current","compilationNumber":null,"startDate":"2026-04-01","status":"Repealed","reasons":null,"registeredAt":null},"sections":[{"sectionNumber":"1","sectionType":"section","heading":"Lloyd's Security Trust Fund Rules No 1","content":"![](image.001.png) \nInsurance Act 1973\n\nLLOYD’S SECURITY TRUST FUND RULES NO 1\n\nI, Graeme John Thompson, Chief Executive Officer of the Australian Prudential Regulation Authority, MAKE these rules under subsection 70(1) of the Insurance Act 1973.\n\nDated 9 June 2000\n\n\\[Signed\\]\n\nG J Thompson\n\nChief Executive Officer\n\n1. Name of rules\n\nThese rules are the Lloyd’s Security Trust Fund Rules No 1.\n\n2. Commencement\n\nThese rules commence on the date of commencement of Schedule 2 (other than item 27) to the Insurance Laws Amendment Act 1998.\n\n3. Definitions\n\nIn these rules:\n\n> Act means the Insurance Act 1973.\n\n> trustee means the trustee of a designated security trust fund.\n\n> Note A number of expressions used in these rules are defined in the Insurance Act 1973, including:\n\n> Note: APRA\n\n> Note: covered\n\n> Note: designated security trust fund\n\n> Note: insurance liability\n\n> Note: Lloyd’s\n\n> Note: qualified corporation.\n\n4. Application\n\nThese rules apply to the operation of designated security trust funds.\n\n5. Compliance with the Act and determination\n\nA trustee must comply with the Act and the trust deed of the security trust fund approved by APRA under the Lloyd’s Security Trust Fund Determination No 1.\n\n6. Assets\n\n(1) A trustee must hold the assets of the designated security trust fund and apply them in accordance with this clause.\n\n(2) An asset must be an asset in Australia unless it is transferred outside Australia under the terms of the trust deed.\n\n(3) A trustee must not hold an excluded asset.\n\n(4) For subrule (3), an asset is excluded if:\n\n(a) it is an asset that would not be included as an asset for Part III of the Act if:\n\n(i) it were an asset of Lloyd’s underwriters, Equitas Limited or Equitas Reinsurance Limited; and\n\n(ii) the holder of the asset were taken to be a body corporate authorised to carry on insurance business; or\n\n(b) the asset is re-invested through an interposed body corporate, trust or partnership with Lloyd’s, Equitas Limited or Equitas Reinsurance Limited; or\n\n(c) the asset is not acquired or maintained at arm’s length from the other party to the relevant transaction.\n\n(5) A letter of credit is an asset only if:\n\n(a) it is given by a body corporate whose name appears under the heading “Australian-owned Banks”, “Foreign Subsidiary Banks” or “Branches of Foreign Banks” in the list of authorised deposit-taking institutions published on APRA’s website; and\n\n(b) it is irrevocable; and\n\n(c) it provides for immediate payment at the written direction of the trustee.\n\n7. Valuation of assets\n\nFor these rules, the value of an asset of a designated security trust fund is the market value of the asset, or, in the case of a letter of credit, its face value.\n\n8. Liabilities\n\nA trustee must not:\n\n(a) borrow for the purposes of the trust; or\n\n(b) charge the assets of the trust; or\n\n(c) incur, or allow to be incurred, a liability that is not for the purposes of the trust.\n\n9. Suspense account\n\n(1) A trustee must hold in a suspense account assets:\n\n(a) transferred to it for the purposes of a designated security trust fund; but\n\n(b) for which the trustee is not given sufficient information to complete its records.\n\n(2) A trustee may apply funds from a suspense account only if:\n\n(a) APRA has given written approval; or\n\n(b) the trustee has obtained the information mentioned in paragraph (1)(a) and transfers the funds to the relevant designated security trust fund.\n\n10. Records\n\n(1) A trustee must keep or cause to be kept, for 7 years after the completion of the transactions to which they relate, records that allow:\n\n(a) the accounts and statements mentioned in Schedules 1 and 2 to be prepared and audited properly and conveniently; and\n\n(b) the trust to be performed, including under judicial trusteeship and winding up under the Act.\n\n(2) A trustee must give to APRA the accounts and statements mentioned in Schedule 1 in the form, for the periods and within the time mentioned in Schedule 1.\n\n(3) The accounts and statements mentioned in Schedule 2 must be audited by an auditor who is approved by APRA.\n\n(4) The trustee must give to APRA an audit certificate in the form and within the time mentioned in Schedule 2.\n\n11. Notices\n\nA trustee must give to APRA written notice of the following matters:\n\n(a) intention to resign;\n\n(b) receipt of a notice of removal as trustee;\n\n(c) failure to fund the designated security trust fund to the level required by the Lloyd’s Security Trust Fund Determination No 1;\n\n(d) default of more than 30 days in payment to the trustee for its services.\n\n12. Giving information\n\n(1) A trustee must provide a copy of the terms of a designated security trust fund if asked by:\n\n(a) a party to a contract of insurance that is covered by the designated security trust fund; or\n\n(b) a person who intends to become a party to a contract of insurance that is covered by the designated security trust fund.\n\n(2) A trustee may charge a reasonable amount for copying material that has previously been given to the person mentioned in subrule (1).\n\n(3) A trustee must give to Lloyd’s enough information to allow Lloyd’s to give to APRA information, accounts, statements and actuarial reports required under the Act.\n\n13. Review of APRA’s decisions\n\nPart VI of the Act applies to a decision of APRA under these rules.\n\n## SCHEDULE 1 Subrule 10(2)\n\nACCOUNTS AND STATEMENTS\n\nPART 1—COMMENTARY\n\n1. The accounts and statements required for subclause 10(2) are:\n\n(a) Form T1—Annual Statement of Assets and Liabilities of the Trustee (to be lodged by each trustee to a designated security trust fund within 4 months of the trustee’s balance date); and\n\n(b) Form T2Q—Quarterly Schedule of DSTF assets (to be lodged within 45 days of the end of each three months period ending 31 March, 30 June, 30 September and 31 December);\n\nas set out in Part 2.\n\n2. Dollar amounts are to be rounded to the nearest multiple of $1,000. For example, $10,500 is to be rounded down to $10,000 and $10,501 is to be rounded up to $11,000.\n\n3. The statements are to be signed by a director of the trustee.\n\n4. The trustee may provide as an alternative to Form T1, a copy of a balance sheet duly lodged for the purposes of the applicable Corporations Law.\n\n \nPART 2—FORMS\n\nFORM TI\n\n```html\n

Insurance Act 1973 LLOYD’S SECURITY TRUST FUND RULES No 1

Form T1 ANNUAL STATEMENT OF ASSETS AND LIABILITIES OF THE TRUSTEE

Name of trustee:

ACN:

Name(s) of designated security trust fund(s) to which a party:

Balance date: (Signed and dated)...........................................(Director)

Total

Item

$’000

CURRENT ASSETS

Cash

Receivables

Investments

Other

Total current assets

NON-CURRENT ASSETS

Receivables

Investments

Other

Total non-current assets

TOTAL ASSETS

CURRENT LIABILITIES

Creditors and borrowings

Provisions

Total Current Liabilities

NON-CURRENT LIABILITIES

Creditors and borrowings

Provisions

Total non-current liabilities

TOTAL LIABILITIES

NET ASSETS

SHAREHOLDERS’ EQUITY

Share capital

Retained profits (losses) at end of financial year

Other

TOTAL SHAREHOLDERS’ EQUITY

\n```\n\n \nPART 2—FORMS\n\nFORM T2Q\n\n| Insurance Act 1973 LLOYD’S SECURITY TRUST FUND RULES No 1Form T2Q QUARTERLY SCHEDULE OF DSTF ASSETS |\n| ---------------------------------------------------------------------------------------------------------------- |\n| |\n| Name of designated security trust fund: |\n| |\n| Report for quarter ended: (Signed and dated)..........................................................(Director) |\n\n```html\n

Inside Australia

ASSETS

Related trusts & bodies corporate

Other

Total

(1)

(2)

(3)

$’000

$’000

$’000

A) CASH

B) DEBT SECURITIES

Bills of exchange

Promissory notes (commercial paper) issued by:

- Commonwealth government bodies

- Other government bodies

- Non-bank financial intermediaries

- Other

Negotiable certificates of deposit (NCDs)

Bonds, inscribed stock, debentures, medium-term notes and transferable certificates of deposit (TCDs) issued by:

- Commonwealth government bodies

- State and local government owned trading companies

- Banks

- Non-bank financial intermediaries

- Other

Foreign debt securities inside Australia

Sub-total

C) SHARES

LISTED

Private trading companies

Banks

Non-bank financial intermediaries

Other

Sub-total

\n```\n\n \n\n| UNLISTED | | | |\n| --------------------------------- | --- | --- | --- |\n| Private trading companies | | | |\n| Banks | | | |\n| Life insurance companies | | | |\n| Other | | | |\n| Foreign shares inside Australia | | | |\n| Sub-total | | | |\n| D) OPTIONS | | | |\n| Listed | | | |\n| Unlisted | | | |\n| Sub-total | | | |\n| E) UNITS IN TRUSTS - LISTED | | | |\n| Property | | | |\n| Trading public unit trusts | | | |\n| Other listed public units trusts | | | |\n| Foreign units inside Australia | | | |\n| Sub-total | | | |\n| UNITS IN TRUSTS - UNLISTED | | | |\n| Cash management | | | |\n| Property | | | |\n| Trading public unit trusts | | | |\n| Other | | | |\n| Foreign units inside Australia | | | |\n| Sub-total | | | |\n| F) DEPOSITS | | | |\n| Banks | | | |\n| Non-bank financial intermediaries | | | |\n| Fund managers | | | |\n| Other | | | |\n| Sub-total | | | |\n| G) OTHER FINANCIAL INSTRUMENTS | | | |\n| H) OTHER INVESTMENTS | | | |\n| I) ALL OTHER ASSETS | | | |\n| TOTAL | | | |\n\n## SCHEDULE 2 Subrules 10(3) and (4)\n\nTrustee audit requirements\n\nPART 1—COMMENTARY\n\n1. The statement required for subclause 10(3) is:\n\nForm T2 - Annual Schedule of DSTF assets (to be lodged within 4 months of the end of each calendar year);\n\nas set out in Part 2.\n\n2. Dollar amounts are to be rounded to the nearest multiple of $1,000. For example, $10,500 is to be rounded down to $10,000 and $10,501 is to be rounded up to $11,000.\n\n3. The statement is to be signed by a director of the trustee.\n\n4. For subclause 10(4), an audit certificate in the form set out in Part 3 must be lodged within 4 months of the annual balance date.\n\n \nPART 2—FORMS\n\nFORM T2 (AUDITED)\n\n| Insurance Act 1973 - LLOYD’S SECURITY TRUST FUND RULES No 1Form T2 (Audited) ANNUAL SCHEDULE OF DSTF ASSETS |\n| ------------------------------------------------------------------------------------------------------------- |\n| |\n| Name of designated security trust fund: |\n| |\n| Report for year ended: (Signed and dated)..........................................................(Director) |\n\n```html\n

Inside Australia

ASSETS

Related trusts & bodies corporate

Other

Total

(1)

(2)

(3)

$’000

$’000

$’000

A) CASH

B) DEBT SECURITIES

Bills of exchange

Promissory notes (commercial paper) issued by:

- Commonwealth government bodies

- Other government bodies

- Non-bank financial intermediaries

- Other

Negotiable certificates of deposit (NCDs)

Bonds, inscribed stock, debentures, medium-term notes and transferable certificates of deposit (TCDs) issued by:

- Commonwealth government bodies

- State and local government owned trading companies

- Banks

- Non-bank financial intermediaries

- Other

Foreign debt securities inside Australia

Sub-total

C) SHARES

LISTED

Private trading companies

Banks

Non-bank financial intermediaries

Other

Sub-total

\n```\n\n \n\n| UNLISTED | | | |\n| --------------------------------- | --- | --- | --- |\n| Private trading companies | | | |\n| Banks | | | |\n| Life insurance companies | | | |\n| Other | | | |\n| Foreign shares inside Australia | | | |\n| Sub-total | | | |\n| D) OPTIONS | | | |\n| Listed | | | |\n| Unlisted | | | |\n| Sub-total | | | |\n| E) UNITS IN TRUSTS - LISTED | | | |\n| Property | | | |\n| Trading public unit trusts | | | |\n| Other listed public units trusts | | | |\n| Foreign units inside Australia | | | |\n| Sub-total | | | |\n| UNITS IN TRUSTS - UNLISTED | | | |\n| Cash management | | | |\n| Property | | | |\n| Trading public unit trusts | | | |\n| Other | | | |\n| Foreign units inside Australia | | | |\n| Sub-total | | | |\n| F) DEPOSITS | | | |\n| Banks | | | |\n| Non-bank financial intermediaries | | | |\n| Fund managers | | | |\n| Other | | | |\n| Sub-total | | | |\n| G) OTHER FINANCIAL INSTRUMENTS | | | |\n| H) OTHER INVESTMENTS | | | |\n| I) ALL OTHER ASSETS | | | |\n| TOTAL | | | |\n\nPART 3—MODEL STATEMENT\n\nInsurance Act 1973\n\nLloyd’s Security Trust Fund Rules No 1\n\nINDEPENDENT AUDIT REPORT ON TRUST ASSETS\n\nScope\n\nI have audited the attached statement of assets for the \\[name\\] designated security trust fund as at \\[date\\].\n\nThe trustee’s directors are responsible for the preparation of the statement and the information it contains in accordance with the valuation requirements of the Insurance Act 1973 (the Act). I have conducted an independent audit of the statement in order to express an opinion on it for the purposes of the Lloyd’s Security Trust Fund Rules No 1 made under sub-section 70(1) of the Act.\n\nThe statement has been audited in accordance with Australian Auditing Standards to provide reasonable assurance that it is free of material misstatement. The procedures included examination, on a test basis, of evidence supporting the amounts and valuations. The procedure has been undertaken to form an opinion whether, in all material respects, the statement of assets is presented fairly in accordance with the requirements of the Act.\n\nAudit Opinion\n\nIn accordance with the Insurance Act 1973 and the Lloyd’s Security Trust Fund Rules No 1, I report that:\n\n- in my opinion, the statement of assets appears to be in accordance with the provisions of the Act;\n\n- in my opinion, the accounting records of the trustee appear to have been properly kept and to record and explain correctly the financial position of the trust fund assets at \\[year end \\] and the transactions for the year ended on that date;\n\n- I have obtained all the information and explanations requested from the trustee;\n\n- I am satisfied that the statement of assets agrees with the accounting records of the trustee and appears truly to represent the financial position of the trust fund assets at \\[year end \\] in accordance with the requirements of the Act; and\n\n \n\n- I am satisfied that the trust has no liabilities other than (if any) the unreimbursed expenses of the trustee.\n\n\\[Signature\\]\n\n\\[Name\\]\n\nApproved Auditor under the Insurance Act 1973\n\n\\[Date\\]","sortOrder":0}],"analysis":{"kimi_summary":{"_metrics":{"model":"kimi-k2.5","source":"moonshot-realtime","completionTokens":2733},"content_quality":"ok","complexity_score":5,"scope_assessment":{"changed":false,"description":"This instrument represents the original establishment of the Lloyd’s Security Trust Fund Rules regime under the Insurance Laws Amendment Act 1998. The scope remains focused on regulating trustees of designated security trust funds for Lloyd’s operations in Australia, consistent with the original intent to implement prudential safeguards for policyholder security funds."},"complexity_factors":["Cross-references to the Insurance Act 1973 and external determinations (Lloyd’s Security Trust Fund Determination No 1)","Technical three-part exclusion test for prohibited assets in rule 6(4)","Specific eligibility criteria for letters of credit (rule 6(5)) including reference to APRA’s published list of authorised deposit-taking institutions","Prescribed forms (T1, T2Q, T2) with detailed formatting and rounding requirements ($1,000 increments)","Suspense account mechanics requiring APRA approval for transfers (rule 9)","7-year record retention requirement tied to transaction completion"],"plain_english_summary":"These rules set how trustees must hold and manage designated security trust funds that secure Lloyd’s of London syndicates’ Australian insurance obligations. They restrict eligible assets and where they’re held, limit borrowing and encumbrances, require market valuation, impose detailed recordkeeping, auditing by APRA-approved auditors, and regular reporting to APRA, and mandate separate handling of unidentified receipts. \n\nThey affect appointed trustees (and indirectly Australian policyholders), ensuring trust assets are safeguarded, transparent, independently audited, and available to meet claims."},"flash_summary":{"complexity_score":5,"scope_assessment":{"changed":false,"description":"These Rules implement supervisory and operational requirements for designated security trust funds under section 70(1) of the Insurance Act 1973 and do not alter which entities fall within the Act. They specify trustee conduct, asset eligibility/exclusions, valuation, recordkeeping, reporting and audit obligations (see cls.4–10 and Schedules 1–2) and vest approval and review powers in APRA (cls.5,9,11,13)."},"complexity_factors":["Reliance on defined terms in the Insurance Act 1973 (rules reference Act definitions rather than restating them) (cl.3)","Detailed asset eligibility and exclusion rules, including arm’s‑length, re‑investment and letter‑of‑credit criteria (cl.6)","Simple valuation rule but operational impact across many asset types (cl.7)","Prohibitions on trustee financing and charging of trust assets (cl.8) create strict operational constraints","Procedures for suspense accounts and APRA approvals for releases (cl.9)","Extensive recordkeeping, periodic reporting and prescribed forms with rounding rules (cl.10; Schedule 1)","Mandatory annual audited schedules and an APRA‑approved auditor plus a model audit opinion (cl.10(3)–(4); Schedule 2)","Notification duties to APRA and statutory right of review of APRA decisions (cls.11,13) concentrate discretion with the regulator"],"plain_english_summary":"These Rules set binding duties for trustees who hold and manage Lloyd’s designated security trust funds in Australia. They say what assets may be held and how they must be valued, forbid borrowing or charging trust assets, mandate record‑keeping and audited reports on prescribed forms, require certain notices to APRA, and give APRA approval and review powers. They affect trustees, Lloyd’s (and parties to covered insurance contracts) by imposing custody, reporting and compliance obligations and creating APRA supervisory discretion."}},"importantCases":[],"_links":{"self":"/api/acts/lloyd-s-security-trust-fund-rules-no-1","history":"/api/acts/lloyd-s-security-trust-fund-rules-no-1/history","analysis":"/api/acts/lloyd-s-security-trust-fund-rules-no-1/analysis","conflicts":"/api/acts/lloyd-s-security-trust-fund-rules-no-1/conflicts","importantCases":"/api/acts/lloyd-s-security-trust-fund-rules-no-1/important-cases","documents":"/api/acts/lloyd-s-security-trust-fund-rules-no-1/documents"}}