Lloyd's members back admission of companies: Three-hour meeting approves refinancing to avoid collapse

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LLOYD'S of London has gained support from its members to embark on a radical refinancing programme to save its insurance market from collapse after suffering pounds 5.5bn worth of losses.

After an emotional three-hour meeting of members, held on the trading floor at Lloyd's last night, the members voted in favour of allowing companies as well as individuals to invest in the market.

Last night David Rowland, Lloyd's chairman, said he was delighted with the result. 'It is a very important step in rebuilding confidence in the market,' he said.

Underwriting members voting in favour of the new plans were 12,844. Those voting against were 591. The total number of members eligible to vote at the meeting was 31,782. More than 1,000 members turned up in person yesterday to vote.

Before the meeting thousands of underwriting members had been asked by action groups, pressing for full financial restitution for their losses, for their voting rights. The action groups intended to use the votes on behalf of the members to oppose the Lloyd's move. Their aim was to ensure that the market's authorities would provide the maximum financial help possible for members brought to the brink of financial ruin.

Intensive behind-the-scenes negotiations had taken place before the meeting between Mr Rowland and Christopher Stockwell, chairman of the Lloyd's Names Associations working party, in an effort to conclude a deal. Mr Stockwell has been trying to ensure that Lloyd's provides fair settlement terms to the members facing the heaviest losses.

Mr Stockwell felt that he had not gained sufficient assurances and sought unsuccessfully to adjourn the meeting last night until 31 January.

He said after the meeting that the results of both votes 'were entirely predictable'.

Lloyd's has already agreed to seek a way to recompense the members.

The errors and omission insurers involved in the scheme have the capacity to pay out around pounds 700m as part of settlement terms. But it is understood that members will be told that they should expect no more than 30p in the pound for the losses suffered.

Two of the largest loss-makers at Lloyd's, groups of syndicates under the management of the Gooda Walker agency, which are facing losses of pounds 925m, and the Feltrim syndicates, may be left out of the current settlement proposals while Lloyd's examines their positions more carefully.

The circumstances that led to the Gooda Walker losses are being examined by the Serious Fraud Office in its first big investigation since the the office was formed in the 1980s.

Many underwriting members are angry that the new investors will escape the troubles of the past, although some of the potential new capital is worried that it might be asked to help to bail out the 17,000 distressed underwriting members who have suffered the bulk of the losses.

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