Brian Garraway, the newly appointed chairman of the Lloyd's Regulatory Board responsible for policing the market, has criticised the style of management at the Rose Thomson Young Agency, which left the members of syndicate 255 with the losses.
The management team of Rose Thomson Young, which is attempting to unscramble the affairs of the syndicate, warned this week that losses could climb to pounds 261m. The losses arose from the October 1987 storms in Europe, the Exxon Valdez oil spill disaster and Hurricane Hugo.
Mr Garraway's specially commissioned loss review committee at Lloyd's has concluded that Rose Thomson Young's executive management did not have relevant underwriting experience. The directors, themselves active underwriters of other syndicates, did not discuss the affairs of syndicate 255 with its professional underwriter, Norman Bullen.
The committee has found that no adequate written underwriting plan was received by the agency for the 1989 underwriting account, in which the pounds 69.4m losses have fallen.
'It has taken a long time for the extent of the 1989 underwriting year loss to be appreciated by either the syndicate or the agency,' the Garraway committee said in its 76-page report.
Despite the extent of the losses from the Piper Alpha oil rig disaster, in the 1988 account, there was no re- examination of estimates for large losses in the following account.
Mr Garraway's committee said it was 'satisfied that Mr Bullen's actions were as a result of errors of judgement and the lack of full appreciation of the market in which he was operating. There is no suggestion of malpractice or personal reward. Mr Bullen has admitted to the committee that with the benefit of hindsight he made errors of judgement. These have had a severe effect on his Names (the members), which include himself and agency personnel. The position was not helped by the lack of effective management control by the agency.'