Business View: The bad old days of insurance are not ancient history

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The Independent Online

Like many people, I tend to glaze over when the words "Lloyd's of London" are mentioned. It feels like a remote scandal, mired in the City of the 1970s and 1980s, with old school ties, deals done in smoke-filled rooms and a cavalier attitude to regulation. It was clear that fraud took place, but all the LMX spirals, infected syndicates and insider trading seem like ancient history.

Like many people, I tend to glaze over when the words "Lloyd's of London" are mentioned. It feels like a remote scandal, mired in the City of the 1970s and 1980s, with old school ties, deals done in smoke-filled rooms and a cavalier attitude to regulation. It was clear that fraud took place, but all the LMX spirals, infected syndicates and insider trading seem like ancient history.

But when I was approached last year by a friend of a friend, I realised how real and live the issue is. Thousands of investors - Names, if you will - are still being chased by Lloyd's for money that they say they should not owe, many trying to hold out against further liabilities arising from the "Reconstruction and Renewal" settlement in 1996.

After the reforms, private investors still put money into Lloyd's. Almost all of them have lost. The renewed Lloyd's has been almost as bad a place for investors as the old Lloyd's.

This week, we have looked at the European Commission investigation into Lloyd's, which found that the regulation had been pitiful and that successive UK administrations were asleep at the wheel. But the EC did nothing because a new regulatory regime came into place on 1 January 2002 and this one was better.

However, as investors are facing cash calls today for business written as far back as 1999 - when supervision was a shambles - surely there should be some comeback.

Over the next few weeks we will be looking at further issues to do with Lloyd's, all of which have a current resonance. Lloyd's, the Financial Services Authority (which is now the regulator) and the Treasury (which has overall responsibility) consider this as relevant to the modern market as the story of Alexander the Great and the fall of Troy

I can assure them, it is not. And I will prove it.

Börse must bite the bullet

Like Old King Cole, Werner Seifert is a merry old soul. But being clubbable has not won the Deutsche Börse chief executive many friends in London. Critics appear to be queuing up to attack his £1.3bn bid approach for the London Stock Exchange, mainly because of the effect on clearing and settlement.

The Börse favours a vertical structure, owning its own settlement company (Clearstream) which one is obliged to use. In the City, we prefer a separation of ownership, because it is thought that it keeps costs down and encourages competition.

The Börse, which has a board meeting tomorrow in Frankfurt, faces a tough choice. If it wants to win the LSE, it either has to give up Clearstream or cough up so much money that Euronext - the Franco-Dutch potential rival bidder which does not have such settlement problems - cannot afford to compete.

Neither look attractive. I suspect the Börse board may feel this adventure is running out of steam. Euronext looks like winning this war without actually firing a shot.

Morrisons needs converts

Just as Jamie Oliver's wife was spotted shopping in Waitrose, Lady Morrison (wife of Sir Ken) has been discovered in the aisles of the Ripon Sainsbury's in North Yorkshire. The branch is one which Wm Morrison had to sell off to be allowed to buy Safeway. The ones that it was able to hold on to show what a great retailer Sir Ken is.

The dismal showing of the old Safeways was behind the fall in Morrisons' figures over Christmas, while the stellar performance of the stores converted show why it is such a shame that it took a year for the competition authorities to allow the Morrison/Safeway deal to go ahead. That year gave Tesco more chance to cement its pre-eminent position in UK retailing - something that will be clear on Tuesday when it will show a 7 per cent growth in sales during the worst Christmas for a decade.

Justin King, the chief executive of J Sainsbury, might be saying there are slight signs of recovery - but it could take three years to turn things around - and Asda simply does not have the locations to hurt Tesco in the south of England.

So our only hope of being saved from Tesco-isation rests with Sir Ken Morrison and his team. More power to their elbows.

j.nisse@independent.co.uk

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