Lloyd's needs Bank rescue, Chatset says

BY WILLIAM GLEESON

Lloyd's of London will need to rely on support from the Bank of England if is to continue trading, according to Chatset, a firm of independent insurance-market analysts.

Chatset, which has a track record of accurately forecasting Lloyd's results, made the claim as it revealed predictions that the insurance market would report a loss just short of £1.5bn for the 1992 year when it announces syndicate results in a few weeks. If this figure is correct, it will bring the total loss over the last five years to £9.5bn.

Chatset's predictions that a Bank of England loan will be necessary follow concerns that Lloyd's is facing difficulty in passing its annual statutory solvency test, which all insurers must pass to be able to continue trading. The problem stems from the refusal of up to 9,000 names to meet their share of the £8bn losses run up in the last four years. Debts are said to be worth over £1.2bn.

Lloyd's needs to put together a refinancing and restructuring plan this summer if it is be able to carry on trading

names still trading at Lloyd's to hand over more cash to the market to pay defaulters' debts.

Chatset analyst Charlie Sturge said: "What we are talking about is a cash crisis. Lloyd's is worried about whether it has enough cash to survive the next 12 months." He added: "Once a claim cannot be paid, the balloon goes up. A levy has to be imminent."

He said the hole in Lloyd's funding was about £1.5bn. He thought the market unlikely to try to raise so much extra money from names and estimated there would be a call for £600m instead. "The rest would have to come from a soft loan from the Bank of England."

David Rowland, chairman of Lloyd's, said: "Lloyd's is not in discussion with the Bank of England about any rescue package, nor do I foresee the need for any such talks."

On Chatset's trading predictions, Mr Rowland said: "Lloyd's is trading very successfully and all independent forecasts indicate substantial profits for the 1993 and 1994 years of account."

Names were alarmed by Chatset's predictions. Michael Deeny, chairman of the Gooda Walker Action Group, which represents more than 3,000 names, said: "Some of my sources tell me the loss is £1.7bn. It is truly depressing to face the fifth year of enormous losses, the great majority of which were not the result of natural catastrophes, but gross negligence and poor regulation by Lloyd's."

Mr Deeny added: "There have been earthquakes, hurricanes and ships sinking ever since Lloyd's was set up 300 years ago without it losing money like this."

Chatset said it expected the market to return to profit next year, when Lloyd's, which reports its results three years in arrears, unveils 1993 results. Chatset said: "1993 and 1994 are both showing very promising results of around £1bn for 1993 and £800m for 1994."

Start your day with The Independent, sign up for daily news emails
Voices
There will be a chance to bid for a rare example of the SAS Diary, collated by a former member of the regiment in the aftermath of World War II but only published – in a limited run of just 5,000 – in 2011
charity appealTime is running out to secure your favourite lot as our auction closes at 2pm tomorrow
Arts and Entertainment
Mark Wright has won The Apprentice 2014
tvThe Apprentice 2014 final
Arts and Entertainment
X Factor winner Ben Haenow has scored his first Christmas number one
music
News
i100
PROMOTED VIDEO
News
news
Arts and Entertainment
James May, Jeremy Clarkson and Richard Hammond in the Top Gear Patagonia Special
tv
News
File: James Woods attends the 52nd New York Film Festival at Walter Reade Theater on September 27, 2014
peopleActor was tweeting in wake of NYPD police shooting
News
Claudia Winkleman and co-host Tess Daly at the Strictly Come Dancing final
people
Extras
indybest
News
peopleLiam Williams posted photo of himself dressed as Wilfried Bony
Sport
Martin Skrtel heads in the dramatic equaliser
SPORTLiverpool vs Arsenal match report: Bandaged Martin Skrtel heads home in the 97th-minute
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

$200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Day In a Page

The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there
The 12 ways of Christmas: Spare a thought for those who will be working to keep others safe during the festive season

The 12 ways of Christmas

We speak to a dozen people who will be working to keep others safe, happy and healthy over the holidays
Birdwatching men have a lot in common with their feathered friends, new study shows

The male exhibits strange behaviour

A new study shows that birdwatching men have a lot in common with their feathered friends...
Diaries of Evelyn Waugh, Virginia Woolf and Noël Coward reveal how they coped with the December blues

Famous diaries: Christmas week in history

Noël Coward parties into the night, Alan Clark bemoans the cost of servants, Evelyn Waugh ponders his drinking…
From noble to narky, the fall of the open letter

From noble to narky, the fall of the open letter

The great tradition of St Paul and Zola reached its nadir with a hungry worker's rant to Russell Brand, says DJ Taylor
A Christmas ghost story by Alison Moore: A prodigal daughter has a breakthrough

A Christmas ghost story by Alison Moore

The story was published earlier this month in 'Poor Souls' Light: Seven Curious Tales'
Marian Keyes: The author on her pre-approved Christmas, true love's parking implications and living in the moment

Marian Keyes

The author on her pre-approved Christmas, true love's parking implications and living in the moment
Bill Granger recipes: Our chef creates an Italian-inspired fish feast for Christmas Eve

Bill Granger's Christmas Eve fish feast

Bill's Italian friends introduced him to the Roman Catholic custom of a lavish fish supper on Christmas Eve. Here, he gives the tradition his own spin…
Liverpool vs Arsenal: Brendan Rodgers is fighting for his reputation

Rodgers fights for his reputation

Liverpool manager tries to stay on his feet despite waves of criticism
Amir Khan: 'The Taliban can threaten me but I must speak out... innocent kids, killed over nothing. It’s sick in the mind'

Amir Khan attacks the Taliban

'They can threaten me but I must speak out... innocent kids, killed over nothing. It’s sick in the mind'
Michael Calvin: Sepp Blatter is my man of the year in sport. Bring on 2015, quick

Michael Calvin's Last Word

Sepp Blatter is my man of the year in sport. Bring on 2015, quick