Lloyd's finds an extra pounds 900m for names

Click to follow
The Independent Online
A extra pounds 900m has been found for hard pressed Lloyd's names as a result of a re-evaluation of the financing needs of Equitas, the reinsurance vehicle that is central to the market's rescue.

The surprisingly large reduction in the cost of funding Equitas is the biggest boost that David Rowland, Lloyd's chairman, has had so far to the prospect of persuading names to vote in favour of the rescue plan.

Together with other additional contributions from brokers, agents and the sale of buildings, which could total as much as pounds 400m, the original pounds 2.8bn rescue package could be improved by at least pounds 1.2bn.

This will allow Lloyd's to write to names shortly - probably next Friday or Monday - offering them substantial extra incentives to vote in favour of the rescue, provisionally on 15 July.

One likely change is a halving to pounds 50,000 of the proposed pounds 100,000 cap on future liabilities of names for further losses, once they have signed up to the rescue package.

The timetable is thought to be slipping, however, because of the extra work involved in refining the settlement. Without a vote in favour by the end of August, when Lloyd's must prove it is still solvent, there would almost certainly be a collapse of the market.

There will be other benefits offered in next weekend's letter. It will include concessions for names who have paid their losses as demanded, for the hardest hit who have won legal actions and for those who are suing accountancy firms.

The number of names eligible for payments by the market is also likely to be expanded from the present 5,000, though Lloyd's would not confirm that the number would reach 6,000.

The reduction comes after detailed negotiations between market authorities and the Department of Trade and Industry.