Lloyd's attempts to force settlement: Market aims to sidestep votes against offer

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The Independent Online
LLOYD's of London is about to spark a row among its 22,000 insurance underwriting members by trying to force through a pounds 900m out-of-court settlement to prevent legal action on pounds 5.5bn worth of losses.

The insurance market authorities are trying to sidestep votes already lodged by thousands of underwriting members rejecting its offer.

The votes against the settlement offer were cast at a series of meetings organised by action groups that are fighting to secure financial help for the members. However, Lloyd's chairman, David Rowland, has launched an initiative designed to save the offer from what many in the City had regarded as certain failure.

He has told the members: 'As you know, several action groups have advised their members to refuse the offer and to pursue litigation. It is not necessary to resign from an action group if you send in a form of assent. If the offer lapses, the form will have no effect.

'Individual forms will not be disclosed to action groups unless we have received forms from more than one third of that action group's members or the offer has been declared unconditional.'

Lloyd's professionals have reported a late rush of acceptances by underwriting members who have had second thoughts about rejecting the offer. This may be sufficient for the authorities to carry the day.

Two of the main action groups, representing members whose affairs were managed by the Gooda Walker and Feltrim underwriting agencies, have already gained overwhelming support for rejecting their collective share of the pounds 900m offer. This amounts to pounds 500m. Gooda Walker members are facing losses of pounds 835m, while Feltrim members are seeking to recover pounds 599m plus interest.

About 4,000 members have supported the stance of the two action groups and, according to the terms of their membership, are obliged to abide by a majority vote once legal action has started. Both action groups have begun legal proceedings.

The pounds 900m offer is due to close on 14 February. Lloyd's has already warned that it will need the acceptance of those collectively entitled to receive 70 per cent of the offer money before the proposal goes through.

Mr Rowland warned members: 'If the offer is withdrawn because of lack of sufficient support I shall regret it. I do not believe that the alternative for members is other than a very lengthy, costly and uncertain prospect leading to an ultimate figure little different from that now proposed.'

Lloyd's has stressed that the offer will not be increased despite appeals by leaders of the Feltrim group, who have been fighting for better terms.