The names, led by veteran activist John Rew, say they are being forced to use other reinsurers in the Lloyd's market who are overcharging them, a claim strongly denied by Lloyd's last night. Mr Rew, a founder of the Association of Lloyd's Members, wants to raise an initial pounds 600,000 from 13,006 affected names to look at the possibility of forming a self-help syndicate.
He believes that orphaned names, with a combined stamp capacity of almost pounds 1bn, are being overcharged by as much as pounds 120m by some specialist Lloyd's reinsurers. But a Lloyd's spokesman said: "We do not think that the [overcharging] figures stand up. The names are using the commercial market and there is plenty of competition there."
And he questioned the viability of the proposed new venture: "Superficially it looks a good idea but how feasible it is I do not know. The largest syndicates currently have stamp capacity of pounds 250m."
At least half of the 13,000 names have ceased trading in the Lloyd's market, leading Mr Rew to conclude that up to pounds 450m of deposits could be locked up in the system. Lloyd's requires 100 per cent of stamp capacity to be backed by deposit. None of the names can formally leave Lloyd's until their 1993 and 1994 open years are closed. Under Lloyd's rules, they can only obtain reinsurance via another Lloyd's vehicle.
The 13,000 names have been wooed by several Lloyd's syndicates, such as 1227, managed by Octavian and backed by Terra Nova Bermuda.Reuse content