Lloyd's boss left after gaffe in US

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The Independent Online
PETER MIDDLETON, who quit sensationally as Lloyd's of London chief executive last week, made critical remarks about the market in the United States, which insiders believe speeded his hasty departure from the troubled corporation.

The resignation stunned the insurance world when announced last Wednesday and Mr Middleton left abruptly after the briefest of handovers on Friday.

Lloyd's official line was that Mr Middleton resigned the Friday before, quitting for a far higher paid job at US investment bank Salomon Brothers.

Better to go straight away than linger, Lloyd's said, despite ongoing tense negotiations over a pounds 5.9bn rescue package for the scandal-rocked market.

Enquiries by the Independent on Sunday have established, however, that Mr Middleton attended a meeting of brokers in Austin, Texas last Monday, deputising for chairman David Rowland in a last-minute switch.

US insurance reporters at the closed meeting confirm that, in off-the- cuff answers to questions, Mr Middleton used the words "rogues and brigands" to describe a core of Lloyd's professionals responsible for past failures in the market.

The remarks, senior market sources say, turned Mr Rowland apoplectic with anger. "He made no reference whatsoever to resignation in his speech," said Dick Rosenblatt, head of the American Names Association.

"There was a remark about 'rogues and brigands'. He made these remarks and Rowland asked him to leave on the spot," Mr Rosenblatt said, echoing London insiders.

Mr Middleton, believed to be in Yorkshire this weekend, was not available for comment, while a Lloyd's spokesman dismissed the talk as "conspiracy theories".

Mr Rowland sounded calm at the end of last week, introducing Mr Middleton's successor, Ron Sandler, former chief executive of money broker, Exco.

The US, and Texas in particular, however, is a key and very sensitive piece in the complicated jigsaw of Lloyd's survival efforts.

It has yet to appeal Texas court rulings finding fraud after pounds 8bn of losses have ruined thousands of names, following negligent underwriting of catastrophe and pollution risks.

Mr Rowland is under subpoena by an Illinois court, pursuant to a claim against Lloyd's US legal advisers, Leboeuf Lamb Greene and MacRae.

Attorney Peter Demerle of the law firm was present with Mr Middleton at the Austin meeting, reporters said.

Lloyd's will try to quash the subpoena this Tuesday. Mr Rowland has not yet answered it, though, and it was that, not talks after Mr Middleton's resignation, that prompted him to stay away from Texas, names say.

All the main names action groups now believe the pounds 5.9bn reconstruction, reinsuring all past losses through a new vehicle Equitas, is doomed to failure without a large increase in the pounds 2.8bn planned settlement to stop legal action against the market.

Lloyd's plans to send final bills, part of a pounds 1.9bn premium names have to pay to Equitas, early next year, but is facing huge problems in calculating individual liabilities.

"We are despondent about getting Equitas off the ground. Settlement will not be possible at pounds 2.8bn. If the premium is pounds 1.9bn, over pounds 4bn will be needed," said Christopher Stockwell, chair of the Lloyd's Names Action Group Working Party.

"If the premium is bigger, the pot will need to be higher."

Names also doubt whether "finality" will be achieved, as Mr Rowland signed a deal with New York Insurance Commissioners in May that if Equitas fails, names will still be liable.

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