Commentary: Navel-gazing no cure for Lloyd's

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The Independent Online
Anyone who thought that the problems of the accident-prone Lloyd's insurance market might be resolved by a few internal reports and management shake-ups was mistaken. Things are as bad as ever.

Analysts suggest that losses for the latest underwriting account, for the 1990 trading period, are more than pounds 1bn - which on the face of it is a mere bagatelle compared with the last reported losses of more than pounds 2bn. But the signs are that the losses in the latest account will yet again be concentrated on a few underwriting members, producing untold hardship.

In the past month alone, the Independent has disclosed that two leading insurance syndicates, numbers 561 and 745, have suffered a large reversal of fortune. In the case of the former, the 1992 underwriting account will do no better than break even, after the ravages of Hurricane Andrew, while the latter has suffered pounds 132m worth of losses from the European windstorm damage of early 1990, on that trading account.

Indeed, throughout Lloyd's it is widely agreed that any recovery is patchy and uncertain, reflecting the world recession in business and commerce.

What existing and potential underwriting members should realise is that a good return relies on fine judgement by the market's professionals allied to a strong up-swing in the business cycle. Navel contemplating - about management behaviour and standards of practice in the market - is whistling in the dark at a time of serious new setbacks. If the assessments of Lloyd's professional underwriters are wrong, the results will always be wrong.

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