Lloyd's has no 'pot of gold': Chairman warns underwriters against court action

Click to follow
LLOYD's of London, the troubled insurance market, stepped up its campaign to force its 22,921 underwriting members to accept a pounds 900m offer to compensate them for pounds 5.5bn worth of losses.

In a stark warning to members today David Rowland, Lloyd's chairman, said there was no pot of gold for any improvement in the offer. 'If any pot of gold exists, it is yours already,' he told members in an internal newsletter.

Mr Rowland added that the offer was in the interests of most members. He warned that the action groups fighting for the maximum financial help possible for members would be 'sorely disappointed' if they pursued their claims through the courts.

'Just as there is no pot of gold at the centre of the Society (of Lloyd's), neither is there an inexhaustible fund to be tapped from errors and omissions insurance,' he warned members. Errors and omissions insurers within Lloyd's are contributing pounds 400m to the total settlement.

The move comes as the largest winner in the Lloyd's offer, 3,000 members of the Gooda Walker insurance syndicates facing losses of pounds 835m, meet today to consider their response to the offer. Members have been offered just over pounds 230m by Lloyd's in compensation.

Peter Middleton, chief executive of Lloyd's, indicated last December that he hoped that those accepting the offer would represent 70 per cent of the pounds 900m planned for disbursement.

But the Gooda Walker underwriting members are poised to reject the terms at a meeting at the Grosvenor House hotel today. Before Christmas, lawyers acting for the Gooda Walker action group, Wilde Sapte, advised that if members took companies operating in the Lloyd's market to court, they would gain larger amounts of money than that contained in Lloyd's settlement plan.

This Friday members of the Feltrim insurance syndicates, who have been offered just over pounds 200m, will meet at Central Hall, Westminster, to consider their response to the offer. The Feltrim action group has already expressed a number of reservations about the offer.

Hundreds of other underwriting members have rejected the settlement plan which now looks doomed to failure.

Lloyd's has already extended the deadline for acceptance of the offer by two weeks until 14 February because of an accounting error that led to a pounds 20m reallocation of money in the settlement terms.