Lloyd's settlement to benefit litigants

JOHN EISENHAMMER

Financial Editor

Lloyd's of London plans to pay the bulk of its global settlement fund to those names who have caused it the most problems through litigation. Conceding that it had not been possible to be fair to all names, Lloyd's said yesterday that three-quarters of the pounds 2.8bn of debt forgiveness and credits will go to those who have fought hardest and been most successful in the courts.

There were also strong hints from senior Lloyd's insiders that the pounds 2.8bn pot of funds for helping names achieve the settlement could well be larger by the time the final individual bills are sent out in late May. Lloyd's is also keeping in reserve the option of taking out a loan in the market, based on future profits at the insurance market, which could be used significantly to increase the settlement fund. This would have the effect of sharply easing the payments many names must pay to end their liabilities at Lloyd's.

Names were quick to point out yesterday that the settlement fund in its current state is inadequate, and especially the pounds 800m of credits from the pounds 2.8bn that is specifically aimed at buying off litigation. "We do say, and we are absolutely categoric about this throughout the names action group community, that they must increase the pounds 800 litigation fund. As it stands it just cannot work," said John Mays, leader of the Merrett names action group and a member of the committee that has been advising Lloyd's on how to distribute the settlement funds among all the 34,000 names.

Names will be given at the beginning of next month the first estimates of their individual bills to Equitas, the giant re-insurance company being set up to take over all Lloyd's old, heavily loss-making policies. Under the settlement, they will be able to write a final cheque, covering all their liabilities, and walk away. The purpose of the pounds 2.8bn is to buy off litigation, and to reduce the cost for most names of achieving finality.

Under the principles of distribution unveiled yesterday, all of the pounds 800m will be reserved entirely for actively litigating names. Those who already have won judgements, such as names on the Gooda Walker action group, could expect to see around 35 per cent of their Equitas cost covered while those early on in the litigation process might receive only 10 per cent. Lloyd's said that any names who are professionals in the market, and responsible for "demonstrable misconduct", will be excluded from assistance.

Of the pounds 2bn debt forgiveness funds, a substantial amount will be directed towards the hardest hit names.

8 Between pounds 300 and pounds 500m is to relieve names who suffered disproportionately high losses

8Between pounds 200 and 300m is to reduce the cost of the Equitas bills.

8 Between pounds 1.1 and 1.3bn is being used to place a cap of pounds 100,000 on Equitas bills. Some 9,000 names face bills around this cap. Lloyd's said it hoped to establish a mechanism so that the debt credits went more to names who really need the money rather than names who have the means but had withheld payment in the past.

8 Finally, pounds 100 to 150m is to assist names who cannot pay their finality bill.

Under the current settlement offer, some 5,000 names will get money back; 16,000 will find their Equitas bill covered by the funds all names have deposited at Lloyd's. The final 35 per cent will need to find money up to the pounds 100,000 maximum.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
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

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

SThree: Talent Acquisition Consultant

£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

Recruitment Genius: Experienced Financial Advisers and Paraplanners

Negotiable: Recruitment Genius: This extremely successful and well-established...

Day In a Page

Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

Making of a killer

What motivated a shy student to kill 38 holidaymakers in Tunisia?
UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

Just when you thought your commute couldn't get any worse...

Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

The Real Stories of Migrant Britain

Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
Cheaper energy on the way, but it's not all sunshine and rainbows

Cheaper energy on the way, but it's not all sunshine and rainbows

Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most
Katy Perry prevented from buying California convent for $14.5m after nuns sell to local businesswoman instead

No grace of God for Katy Perry as sisters act to stop her buying convent

Archdiocese sues nuns who turned down star’s $14.5m because they don’t approve of her
Ajmer: The ancient Indian metropolis chosen to be a 'smart city' where residents would just be happy to have power and running water

Residents just want water and power in a city chosen to be a ‘smart’ metropolis

The Indian Government has launched an ambitious plan to transform 100 of its crumbling cities
Michael Fassbender in 'Macbeth': The Scottish play on film, from Welles to Cheggers

Something wicked?

Films of Macbeth don’t always end well - just ask Orson Welles... and Keith Chegwin
10 best sun creams for body

10 best sun creams for body

Make sure you’re protected from head to toe in the heatwave
Wimbledon 2015: Nick Bollettieri - Milos Raonic has ability to get to the top but he must learn to handle pressure in big games

Nick Bollettieri's Wimbledon files

Milos Raonic has ability to get to the top but he must learn to handle pressure in big games
Women's World Cup 2015: How England's semi-final success could do wonders for both sexes

There is more than a shiny trophy to be won by England’s World Cup women

The success of the decidedly non-famous females wearing the Three Lions could do wonders for a ‘man’s game’ riddled with cynicism and greed
How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

How to stop an asteroid hitting Earth

Would people cooperate to face a global peril?
Just one day to find €1.6bn: Greece edges nearer euro exit

One day to find €1.6bn

Greece is edging inexorably towards an exit from the euro
New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

'Iron Man' augmented reality technology could become reality

Holographic projections would provide extra information on objects in a person's visual field in real time
Sugary drinks 'are killing 184,000 adults around the world every year'

Sugary drinks are killing 184,000 adults around the world every year

The drinks that should be eliminated from people's diets
Pride of Place: Historians map out untold LGBT histories of locations throughout UK

Historians map out untold LGBT histories

Public are being asked to help improve the map