Lloyd's urged to adopt one-year accounting: Members' association calls for reforms to help bankrupt investors

THE Association of Lloyd's Members, which represents more than 8,000 investors, has demanded a range of reforms in the troubled insurance market.

The association, headed by Neil Shaw, has told Lloyd's that more help should be given to underwriting members who are facing financial ruin and losing confidence in the market.

The association has urged Lloyd's to adopt one-year accounting procedures as soon as possible. At present Lloyd's uses a unique three-year accounting procedure that allows it to keep its books open for two years longer than ordinary companies. The market has traditionally argued that this arrangement is necessary to allow the extent of potential liabilities on insurance policies to be properly assessed and accounted.

The association argues that Lloyd's should move to one-year accounting so that the books for the 1993 account, which is expected to show a profit, would be closed next year. The association says that if these profits were released as soon as possible this would go a long way to helping members pay their losses, which are expected to be pounds 1bn or more on the 1990 underwriting account.

Amid calls from underwriting members that Lloyd's should be liquidated as a business, the association has sought a legal opinion from Christopher Bishop of the accountants Ernst Young.

Mr Bishop has advised that 'it is difficult to imagine which part of Lloyd's names (the underwriting members) might petition the court to liquidate'. Mr Bishop said that he did not foresee that any administrator handling a liquidation of Lloyd's would be able to go beyond collecting assets belonging to the administrative hub of the market, the Corporation of Lloyd's.

'It is unlikely that any surplus after administration costs would be of any material advantage to those names who have lost so much money in recent years,' he said.

The association has also complained to Lloyd's that at least two professional underwriters, responsible for large losses among the wider membership, have been able to remain as ordinary members in the market.

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