It has been clear for a long time that only the most radical plan would be able to save Lloyd's from being crushed beneath the burden of unpaid debts, mounting losses, and confidence-sapping litigation. David Rowland and Peter Middleton, to judge by their restructuring programme announced yesterday, have gone a good way to meeting these requirements, and deserve the credit for it. The complex plan to wipe the slate clean of Lloyd's pounds 6bn liabilities, settle all names' litigation with a promise that they can walk away from the nightmare of seemingly endless losses, and provide the basis for a "new Lloyd's" to trade profitably into the future, is only a blueprint. It is as much a rough guide to the sums needed as a statement of hope. But it is the first real indicator that Lloyd's has a serious chance of getting on top of its problems.
Yesterday's package, including a pounds 2.8bn settlement for names in an effort to persuade them to give up litigation, is also a vindication of those countless aggrieved investors who have fought hard - enduring vilification, threats and worse - to secure a better deal. It is not just the bad luck of natural disaster and the unforeseeable retrospective legislation in the US on asbestos claims that has ruined so many names. It is also greed and incompetence on a grand scale inside the market. Names are getting a better deal, and would be well advised to accept it with some modification. Most of the parties involved now appear to be heartily sick of the whole sordid affair, and the litigation whose main beneficiaries are lawyers.
That being said, some names may well want to argue about the fairness of the Lloyd's grand plan in the months of negotiations to come. Looking at the cash calls, it appears that Lloyd's is still looking after its own rather too well, at the expense of names. Agents, putting in a mere pounds 200m, are getting off very lightly. As for brokers and auditors, who have much to answer for, the fact that they are getting off scot free cannot be right. Some rebalancing of the burden must occur, if this plan is to succeed in making the new, rather than breaking the old, Lloyd's.