Lloyd's last night embarked on the biggest mailing exercise in its history, sending out worldwide the individual bills that names have been waiting for, fearing, for many months.
A roll-call of famous names, including Virginia Wade and Henry Cooper, the actress Susan Hampshire and Ian Lang, the President of the Board of Trade, will be among those looking to the doormat on Monday morning for the bulky package, full of advice and warnings, and the vital figure of what Lloyd's pledges is the final bill to end it all.
About 9,000 names face paying the maximum pounds 100,000, over and above losing all their funds deposited at Lloyd's. A further 4,000 will need to raise cash sums of up to pounds 100,000 as the cost of covering all potential liabilities from the old policies that Lloyd's is hiving off into a special re-insurance vehicle, Equitas. Lloyd's stressed yesterday that these are estimated bills; the final Equitas premium statements will be sent out in late May.
Lloyd's chairman, David Rowland, urged names in an accompanying letter to bite the bullet and accept this as the price for drawing a line under the traumas of the past. There will not be another settlement plan. "If we miss this opportunity, the consequences will be very serious. None of us should be under any illusion that any alternative proposals offer greater comfort," he said.
But several names' action group leaders, who had received their bills earlier, warned that the cost for the hardest-hit and most litigious names is still too high. "As a result of what we know now, it is clear the amount of money on the table is insufficient. We need another pounds 400m to make Equitas fly," said John Mays, chairman of the Merrett action group.
He is among a deputation of names' leaders urging the Department of Trade and Industry to bring pressure to bear on Lloyd's to find more than the pounds 2.8bn of credits and debt relief that the society is using to reduce the cost to names of settling.
Representatives of the names believe that without another pounds 350m-pounds 500m added into the pot to reduce, and perhaps halve the size of the maximum bill to pounds 50,000, there is a serious risk that the settlement will be voted down when it is put to the market as a whole in July. Names believe it would cost only about pounds 350m to halve the cap.
As well as shrinking the pounds 100,000 cap, which affects 9,000 heavily loss- making names, there are hopes that additional funds can be found to help out members of the hardest-hit syndicates and to increase the sums set aside for hardship relief. "Either Lloyd's needs to find more funds from market professionals, or with the DTI it must agree to reduce the very harsh reserving requirements for Equitas. Either would ease the cost to names," Mr Mays said.
Anthony Nelson, the DTI minister responsible for the insurance market, has been told by names groups that the funding of Equitas is far too conservative and is mopping up money that could be better used in improving the terms for names.
Lloyd's has been hinting privately that it expects to be able to increase the offer to names by the time the final bills go out, even if it means raising a loan in the market.
Comment, page 21
Weekend, page 22
The Lloyd's nightmare
1987 Profit pounds 509m
1988 Loss pounds 510m
1989 Loss pounds 1.9bn
1990 Loss pounds 2.3bn
1991 Loss pounds 2bn
1992 Loss pounds 1.2bn
1993 Est profit pounds 1bn
1994 Est profit pounds 1bn
1995 Est profit pounds 888mReuse content