Lloyd's rebels plan fight fund

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The Independent Online
Rebels at Lloyd's of London are planning a new "super group" with a pounds 15m fighting fund to carry on the legal battle against the troubled insurance market's pounds 3.1bn Equitas rescue plan.

This weekend action groups are mailing 23,000 names to canvass support for the new United Names Organisation, despite overwhelming support for Equitas among the 60 per cent of members that voted at Lloyds annual meeting last Monday.

The move comes as Lloyd's suffers a wave of defections to its pounds 40m agreement with US State Securities Commissioners, that cast in doubt achieving the 80 per cent acceptance threshold it has set. The market is also bracing itself for a wave of unquantifiable claims if last Wednesday's explosion of a TWA flight off Long Island, which killed 230 people, proves to be a terrorist attack.

Several senior US executives, including the chief of Disney's US sports network, were on board the TWA Boeing 747 and federal investigators are already probing possible terrorist links.

"If it's a bomb, then under policies it becomes a 'war risk', which is mainly underwritten in the London market," a Lloyd's spokesman said.

Lloyd's planned respite after Monday's vote has already proven to be short-lived, as other disgruntled names announced plans for a judicial review of Equitas on Friday.

The Paying Names Action Group has written to Lloyd's chief executive Ron Sandler demanding equal treatment for its 3,000 members, who have paid their share of Lloyd's pounds 8bn of losses.

The group claims it has been disadvantaged as Equitas gives more help to those who have not paid up or have taken Lloyd's to court in a wave of fraud and negligence suits Equitas aims to end.

"We are advised by counsel that we have a good case for judicial review on the legality of Equitas. We are being asked to contribute to a fund which is helping other avoid their losses," the group's chairman Tony Welford said.

In the US, seven states - Arizona, Utah, Missouri, Tennessee, Indiana, West Virginia and Illinois - have now firmly rejected a framework agreement announced on 11 July and another eight have yet to sign.

Lloyd's still claims 34 states are already on board, where around 80 per cent of the 2,700 US names are based. Fierce lobbying by aggrieved names is still continuing, however, which may lead to further states recanting.

These include Colorado, which started the wave of actions last December and whose Securities Commissioner Philip Feigin led the negotiations on behalf of the North American Securities Administrators Association.

"It's still a fluid issue. The Attorney General's office is now seeking input from names to review the agreement entered into by the Commissioner," one Colorado state official said.

"I query Lloyd's release saying they have already got over 80 per cent of the names."

Lloyd's also faces seven other law suits from names in the US, the latest shortly to be filed in a Virginia federal court seeking a injunction to block Equitas. The 53 plaintiffs claim Lloyd's is in breach of US securities laws by not filing a full prospectus before Equitas goes ahead.