Lloyd's faces new onslaught

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The Independent Online
LLOYD'S OF LONDON, the insurance market, is bracing itself for a fresh onslaught this week, as it finally sends out outline bills on the amounts due to meet the cost of its pounds 5.9bn Equitas survival plan.

Next Friday, 32,000 indicative statements will be mailed to names, as members are called, in a move intended for last October but delayed by a wave of court cases in the UK and US over pounds 8bn of losses that the market sustained from 1986.

Extra cash calls beyond names' reserves at Lloyd's will be capped at pounds 100,000, but that will come as scant comfort to thousands who are, in effect, already bankrupt.

More than 50 Conservative MPs are among the losers, including the President of the Board of Trade, Ian Lang, whose department has to sanction Equitas.

"The indications we're getting are that names are going to give it a pretty hostile reception," said Christopher Stockwell, chairman of the Lloyd's Names Associations' Working Party, which represents 47 names action groups. "The whole Equitas route looks much worse than letting Lloyd's cease to trade."

But many doubted preliminary guidance would appear at all before the final bills, which are due by June.

Lloyd's says in 95 per cent of cases, the interim bills will be within pounds 15,000 of the final amounts. That supposes, however, that a pounds 2.8bn settlement will end litigation, while action groups are demanding pounds 4bn plus.

"Of course, the chorus of disapproval between June and now will be enormous," a Lloyd's spokesman said. "But names are weary of it all. They just want finality and out."

In the latest blow to the market, last Thursday Missouri became the sixth US state to launch fraud action against Lloyd's, alleging it covered up huge asbestos liabilities in the 1980s.

US sources say securities regulators in Texas, Pennsylvania, New Hampshire, Connecticut, Massachusetts and Georgia are likely to follow suit shortly, while New York is also investigating.

Next week, California will also try to persuade a federal court to shift jurisdiction back to the state in its attempts to bar Lloyd's from doing business and to freeze its $10bn (pounds 6.6bn) US trust fund.