How does excess account protection coverage work?
The following scenario illustrates how excess account protection coverage works: Imagine that the unlikely event that Pershing LLC fails, and as a result, there are $200 million of client claims on assets over a period of 10 months, from three clients that are in excess of SIPC limits. Assuming that the client account values are $100 million, $75 million, and $25 million: • In an account protection claim proceeding, the clients would receive up to $500,000 from SIPC and the remaining assets through Lloyd’s of London, up to the limit of the Lloyd’s insurance policy. • The loss on the $100 million, $75 million, and $25 million client accounts would be zero, assuming the aggregate limit of the Lloyd’s of London policy ($1 billion) has not been reached. Lloyd’s of London would pay these excess claims. • The outstanding aggregate amount for any further excess account protection claims for the remaining 2 months (within the 12-month period) is $800 million, assuming no other claims have been
