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.

Sport
Romelu Lukaku
sportChelsea striker sends second teasing tweet of the day
News
peopleHowards' Way actress, and former mistress of Jeffrey Archer, was 60
News
Robyn Lawley
people
Sport
Japanese referee Yuichi Nishimura sprays a line after calling for a free kick for Brazil
sport
PROMOTED VIDEO
News
ebookA unique anthology of reporting and analysis of a crucial period of history
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

Senior Investment Accounting Change Manager

£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...

BA/PM,EMIR/Dodd-Frank,London,£450-650P/D

£450 - £650 per day + competitive: Orgtel: My client, a leading bank, is curre...

Senior Analyst - ALM Data - Banking - Halifax

£350 - £400 per day + competitive: Orgtel: Senior Analyst, ALM Data, Halifax, ...

Java developer - Banking - London - Up to £600/day

£500 - £600 per day: Orgtel: Java developer - Banking - London - Up to £600/d...

Day In a Page

Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star
How live cinema screenings can boost arts audiences

How live cinema screenings can boost arts audiences

Broadcasting plays and exhibitions to cinemas is a sure-fire box office smash
Shipping container hotels: Pop-up hotels filling a niche

Pop-up hotels filling a niche

Spending the night in a shipping container doesn't sound appealing, but these mobile crash pads are popping up at the summer's biggest events
Native American headdresses are not fashion accessories

Feather dust-up

A Canadian festival has banned Native American headwear. Haven't we been here before?
Boris Johnson's war on diesel

Boris Johnson's war on diesel

11m cars here run on diesel. It's seen as a greener alternative to unleaded petrol. So why is London's mayor on a crusade against the black pump?
5 best waterproof cameras

Splash and flash: 5 best waterproof cameras

Don't let water stop you taking snaps with one of these machines that will take you from the sand to meters deep
Louis van Gaal interview: Manchester United manager discusses tactics and rebuilding after the David Moyes era

Louis van Gaal interview

Manchester United manager discusses tactics and rebuilding after the David Moyes era
Will Gore: The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series

Will Gore: Outside Edge

The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series
The children were playing in the street with toy guns. The air strikes were tragically real

The air strikes were tragically real

The children were playing in the street with toy guns
Boozy, ignorant, intolerant, but very polite – The British, as others see us

Britain as others see us

Boozy, ignorant, intolerant, but very polite
How did our legends really begin?

How did our legends really begin?

Applying the theory of evolution to the world's many mythologies
Watch out: Lambrusco is back on the menu

Lambrusco is back on the menu

Naff Seventies corner-shop staple is this year's Aperol Spritz