Ahead of the announcement that losses for the entire market will top pounds 2.8bn for the last completed underwriting account, Claud Gurney, a former City regulator, has tabled two motions that threaten the way Lloyd's is run. An extraordinary general meeting of the market's 20,000 underwriting members will have to be held.
In his two resolutions, Mr Gurney has raised the issues of accountability to underwriting members and the admission of new money into the market in the form of corporate capital. If Lloyd's fails to defeat the resolutions, members will deem that a vote of no confidence has been passed in the market's authorities.
Resolution one calls for Lloyd's, its staff and members of its ruling council to owe fiduciary and legal duties of care to the members, and says Lloyd's is not exempt from having to pay damages to any individual who has suffered losses. Lloyd's has legal immunity against the financial consequences of suits for damages.
Resolution two requests that before companies are admitted to the market as part of Lloyd's plans to raise new money, the move must be approved by two- thirds of the membership. The resolution calls on Lloyd's to issue a prospectus demonstrating how corporate capital will be admitted and at what price.
Mr Gurney said his move had been prompted by a belief 'that the only way to secure a profitable future for Lloyd's is to give all members, whether or not they have incurred losses, a shared interest in the future profits of the society (of Lloyd's). The current members clearly own the goodwill and assets of the Corporation (of Lloyd's).'
Also in the next few days, a pioneering joint venture aimed at raising outside capital for the troubled Lloyd's insurance market is expected to be signed.
Institutional and other investors are understood to have committed nearly all the dollars 70m capital sought for the offshore reinsurance venture, which is being set up by Merrett Holdings, the largest underwriting group at Lloyd's, Marsh & McLennan, the world's largest insurance broker and JP Morgan, the US investment bank.Reuse content