Gooda Walker losses will exceed 900m pounds, members warned

Click to follow
ABOUT 3,000 underwriting members of the Lloyd's of London insurance market were warned yesterday that their losses will exceed pounds 900m and could be substantially larger, in one of the worst financial failures ever to hit a small group of private investors in the City.

The warning came from GW Run- Off, a company that has been managing the affairs of the former Gooda Walker underwriting agency group since October 1991.

Gooda Walker is now in liquidation. The agency managed seven insurance syndicates at Lloyd's, into which 3,500 underwriting members were grouped. The syndicates have suffered the largest run of losses in the market's 305-year history, representing, on current estimates, an average pounds 264,285 liability for each member.

GW Run-Off's chairman, Ralph Sharp, said yesterday that losses for the 1990 underwriting account could be pounds 190m, making the combined deficit since the 1998 account pounds 925m. Unlike conventional companies, Lloyd's leaves its accounts open for three years before closing its books.

He added: 'All the indications are that things are going to get worse.'

So far the underwriting members have been asked to pay pounds 598m from their own resources to meet the insurance losses. GW Run-Off has received pounds 403m from those members who can afford to pay. A further pounds 40.5m has been asked for from the members to cover further shortfalls on the syndicates' books.

The syndicates' losses have arisen from a range of problems stemming from its involvement in asbestosis- related and pollution damage risks. In turn the losses have been exaggerated by the way in which the syndicates reinsured risks among other syndicates within the group and allowed liabilities that had passed out into the market to come back on to their books.

An internal report published last year by Lloyd's was critical of the internal controls at the former Gooda Walker agency company.

The deteriorating situation led to an angry response in the market. Alfred Doll-Steinberg, a businessman who set up an action group to represent the underwriting members, many of whom face financial ruin, said: 'It comes as a nasty shock, but not as a total surprise. I was expecting the losses to reach pounds 1bn. The overall situation is scandalous and there is more deterioration to come.'

He warned that legal action against a number of companies within the Lloyd's market was imminent in the wake of the losses.

A delegation of Members of Parliament is to meet the authorities of Lloyd's today to discuss the way in which the organisation is handling its problems. The entire Lloyd's market is expected to report losses of pounds 2bn, equalling last year's reported losses.

Michael Deeny, a concert promoter who takes over as chairman of the Gooda Walker action group later this month, said: 'We are horrified at the deterioration.'

Lloyd's said yesterday that the latest projections for the results of the syndicates 'accord to our own figures'. David Rowland, Lloyd's newly appointed chairman, said: 'I am deeply concerned about Gooda Walker's losses. Clearly we are thinking about them very carefully.'

Comments