Lloyd's members group launches inquiry into losses

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A NEW wave of legal action is set to take place at Lloyd's after a group of underwriting members decided to mount a detailed investigation into events surrouding insurance syndicate 745.

At a meeting on the fifth floor of Lloyd's yesterday about 50 of the market's 1,750 underwriting members decided to form an action group designed to discover the circumstances surrounding pounds 132m of losses at the syndicate, which is under the management of the KPH Underwriting Agency.

Yesterday's initiative was co- ordinated by the Association of Lloyd's Members, representing about 8,000 underwriting members, and a senior broker, Ted Benfield, of Lowndes Lambert, who is a member of 745.

The losses that have hit the syndicate have been caused by larger- than-expected payouts on insurance claims arising from European storm damage in 1990 and other large claims.

David King, the underwriter of the syndicate, was asked to resign from his post on 14 October by the board of the KPH agency company because of the deteriorating position.

Mr Benfield argued yesterday that the losses could be even worse than indicated and warned that the claims experience was deteriorating significantly each month.

The underwriting members plan to constitute the action group speedily and seek a detailed accountants' report on the underlying situation at the syndicate.

Christopher Stockwell, co-ordinating the efforts of all action groups, is acting in a consultancy capacity.

The authorities at Lloyd's yesterday indicated that the number of resignations among members was running at around 2,000, trimming membership of the market to about 20,000, its lowest level since 1982. In the face of rising concern among worried professionals in the market, Lloyd's said that it would be unable to quantify precisely its financial capacity to accept insurance during this year until April or May.

David Rowland, Lloyd's newly- elected chairman, estimates that there would be pounds 8.5bn to pounds 9bn worth of financial resources to accept business compared with around pounds 10bn last year.

Peter Middleton, Lloyd's chief executive, said that the delay in having reliable centralised information about Lloyd's financial resources resulted from the market's attempt to relieve the administrative burden on agencies which file information.

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