Lloyd's bosses summoned before House committee

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The Independent Online
David Rowland and Peter Middleton, respectively chairman and chief executive of the Lloyd's of London insurance market, have been recalled to appear before the House of Commons Treasury Select Committee today for a hastily-arranged private hearing.

The recall of the two men follows their appearance before the committee in February. At that hearing, Mr Rowland said Lloyd's was facing difficulty in meeting statutory solvency requirements. However, he gave no indication of the severity of the crisis affecting the market.

If the market fails to meet its solvency requirements, it could be forced to close.

Today's hearing follows weekend revelations in the Independent on Sunday that Lloyd's faces a cash and solvency crisis that threatens the market with closure unless a rescue plan can be put in place before the end of the summer.

Lloyd's problems are being caused by thousands of names who cannot or will not pay their share of the £8bn losses Lloyd's has run up in the past four years.

Committee member Diane Abbott, Labour MP for Hackney North and Stoke Newington, said: "We have become increasingly concerned about the future solvency of Lloyd's and wish to discuss it and recent developments with Lloyd's before we publish our report."

Ms Abbott added the pair would also be quizzed about reports that names were becoming increasingly reluctant to pay their debts.

She said the committee, which conducted an inquiry into regulation at Lloyd's earlier in the year, was not satisfied with the existing regulatory environment in which Lloyd's operated.

Conservative MPs wanted Lloyd's placed under the regulatory control of the Securities and Investment Board. The Labour MPs want Lloyd's to have its own stricter regulatory regime, staffed by people with sufficient specialised knowledge of the market to oversee it.

Ms Abbott said: "Committee members had felt disappointed by the replies given by the Lloyd's management when they appeared before us and we are keen to define their exact position before the publication of this key report."

Lloyd's rescue plan is thought to include a levy on those names trading on at Lloyd's.

This would be used to pay for the defaulting names' share of the losses. At the same time Lloyd's is trying to solve the litigation that is otherwise poised to dog the market for years to come.