Lloyd's battles to solve market's capital needs

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The Independent Online
THE authorities of Lloyd's are struggling to produce a credible business plan to resolve the market's capital needs before it announces a further pounds 2bn worth of losses.

David Rowland, Lloyd's chairman, said that the plan would be unveiled next month, the first of its type in Lloyd's 300-year history.

Mr Rowland said yesterday that the plan would deal with five broad issues - cost reduction and ways to improve services; the improvement of professional standards; ensuring capital growth and improving the capital base; future business development; and what Lloyd's describes as inherited problems, such as the large bulk of the 230 insurance syndicates that have not been able to close their books.

McKinsey, the international management consultancy, is providing help. In the past two years it has produced a report on Lloyd's future for the next five years, published last year at a cost to Lloyd's of pounds 2m. Mr Rowland chaired a Lloyd's task force that worked with McKinsey on the previous study.

That study was widely regarded by the market to have been of little relevance to the problems caused by the billions of pounds of losses that subsequently surfaced. Mr Rowland said that the latest plan would cost less than the earlier McKinsey report.

Lloyd's said that its market and insurance companies operating in London could face claims of up to dollars 300m from the explosion at New York's World Trade Centre.

The Port Authority of New York and New Jersey, owner of the centre, has three policies led by Lloyd's underwriters but market officials have no precise figures of the claims that will eventually emerge.

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