The company, Equitas, has been told by Anthony Nelson, minister for trade, that it can start operations towards the end of August.
But this is conditional on Lloyd's demonstrating that it has the money to back Equitas - and critical to this will be approval for the rescue plan by the names who make up the market.
The DTI and Lloyd's made clear yesterday that the vast bulk of Lloyd's members must approve the plan for Equitas to receive sufficient funds to go ahead.
Equitas will take on Lloyd's liabilities from 1992 and before into a single reinsurance operation, taking the burden off those who have lost large sums on loss-making business, in return for an end to court claims by aggrieved names.
Mr Nelson said Lloyd's had acknowledged that there was a risk that the market as a whole would have to cease underwriting if Equitas did not proceed.
Names are to contribute to the funds needed to start Equitas, and if it goes bust they will still be liable for any shortfall on claims made by policyholders.
However, if Equitas does better than expected it will repay premiums to the names, like a dividend.
Mr Nelson said the proposal to allow residual claims to fall back on names "would provide a much superior outcome for all policyholders, including reinsured names, than conventional insolvency proceedings for Equitas".
The Government actuary, in carefully measured language, gave some encouragement to names that Equitas would survive when he said there was "a reasonable prospect that Equitas will be able to pay off its liabilities in full as they fall due".
The announcement from Mr Nelson also gave hope to names that there could be a reduction in the amount of money they have to put into Equitas to get it started. Lloyd's has indicated that this will be about pounds 1.9bn, but the DTI chose to put the figure at "more than pounds 1.5bn".
Officials made clear that they did not rule out a number lower than pounds 1.9bn when the final calculations are done. They said that the DTI's interest was only in the total required to set up Equitas, and it was up to Lloyd's whether it came from names or other sources.
The DTI estimates that Equitas, the outcome of one of the biggest capital reconstructions ever undertaken in Britain, will begin life with assets of at least pounds 13.5bn and liabilities of at least pounds 13bn. Earlier figures for liabilities were nearer pounds 16bn.
The DTI will require Equitas to maintain free assets - the surplus over liabilities - of at least pounds 500m.
David Rowland, chairman of Lloyd's, said: "Equitas is the cornerstone of Lloyd's reconstruction plan. The reserves would ensure that the company was sustainable and that it could provide members with a final reinsurance of their liabilities."Reuse content