The report, seen by the Independent, is the most detailed ever produced by the authorities of the market.
It describes in 1,494 pages the circumstances in which the losses arose, bringing nearly 3,000 underwriting members to the brink of bankruptcy and provoking the biggest public row at Lloyd's in years.
However, the committee, led by Kieran Poynter, a partner with the accountants Price Waterhouse, has concluded that it 'did not encounter any evidence of impropriety of a dishonest nature during the course of its work'. It also concluded that 'Lloyd's had properly administered the relevant regulatory requirements relating to the Gooda group'.
The report, sent to underwriting members yesterday by Lloyd's, provoked strong reactions among them. Tom Benyon, founder of the Society of Names, which was set up to protect the interests of distressed members, said: 'This report is marvellous ammunition for us. It will help us negotiate settlement with the agency's insurers for negligence.'
Alfred Doll-Steinberg, who heads an action group seeking relief for the underwriting members, said: 'The report is of inestimable value. Our legal and technical experts are studying it and we will be taking appropriate legal action.'
Mr Poynter, along with Harvey Simon, a senior underwriter and director of CN International, and James Terry, a consultant with the Thomas R Miller broking group, was commissioned last year by Lloyd's to investigate the Gooda Walker losses. These represent more than a quarter of the entire pounds 2.5bn of losses incurred by Lloyd's over the last two years.
The committee focused on several issues and weaknesses which might be considered within the existing regulatory framework and which it wanted to draw to the attention of the ruling Lloyd's council.
According to the Poynter committee:
Many underwriting members were unaware of the high-risk nature of the syndicates they were joining because of the lack of a proper prospectus detailing the syndicates' affairs.
More reliable and up-to-date records are needed of the exposure to risks of members.
More risks at Lloyd's should be laid off with insurance companies specialising in reinsurance.
Tighter controls need to be implemented to ensure that risks are strictly related to capital resources.
Lloyd's should review the use of insurance policies designed to help syndicates' cash flow, which can make losses worse if they are not used properly.
The Poynter committee is critical of the structure of the Gooda Walker agency, which not only introduced members to the loss- making syndicates through a subsidiary company but also managed the syndicates through another company. Other agency companies introducing members to the syndicates may have been inhibited in taking an objective view of the high risks because of the common ownership.
'This was summed up by Anthony Gooda's (the chairman of Gooda Walker's) often-quoted remark to new names that 'we won't make you a fortune but we won't lose you one either',' the committee said.
The report concluded that a main cause of the losses was that risks were concentrated within Gooda Walker syndicates. It was usual for one of the agency's syndicates to insure another syndicate against loss.
For individuals the losses became severe because certain agents within Lloyd's steered them solely towards Gooda Walker syndicates rather than spread their risks throughout the market. Entire families might be placed on the same loss-making syndicate.Reuse content