More than 1,600 investors in the Lloyd's of London insurance market yesterday won a court battle to prove that the Feltrim underwriting syndicate was negligent in investing their money.
The names - investors whose wealth supports the market - were claiming damages of £525m against the Feltrim syndicate and 59 underwriting agencies.
The level of damages has yet to be set, and the claim is likely to go to appeal. Last year Feltrim names were among those who rejected a global settlement offer from Lloyd's of £220-£240m.
Damon De Laszlo, chairman of the Feltrim Names Association, said the investors were thrilled:"It's the culmination of a four-year battle by the names and their determination has been justified. We are confident we will get a substantial proportion of the sum claimed.''
In his judgment, Mr Justice Phillips found that a significant proportion of Feltrim losses were due to the incompetence of the two main underwriters, Patrick Fagan and Robert Gofton-Salmond.
In a summary of the judgment, Feltrim names' lawyers said Mr Justice Phillips had described Mr Fagan's second witness statement as untrue and said Mr Gofton-Salmond had been negligent.
"This is a devastating document from the Lloyd's management point of view and from the regulatory point of view," Mr De Laszlo said.
The investors had placed their money in what turned out to be highly risky reinsurance businesses, managed by Feltrim. Disasters such as the Piper Alpha platform fire in the North Sea and Hurricane Hugo in the US had caused huge losses.
Last October the High Court found that the Gooda Walker agents at Lloyd's were negligent and awarded compensation estimated at £500m.Reuse content