Sturge's cash problem comes hard on the heels of revelations in last week's Independent on Sunday that the Lloyd's market is suffering a liquidity crisis that threatens it with closure, unless a rescue plan is put in place by the end of the summer.
A letter written by a director of Sturge reveals that Sturge's bankers turned down a request for cash to meet claims from policyholders whose names - Lloyd's investors - are refusing to pay.
The 5,200 names on Sturge syndicate 210 have refused to hand over £54m, forcing the agency to cash in investments that had been set aside to meet claims expected to arise after 1997.
The letter says the syndicate has had to meet claims earlier than expected. It adds that the situation has been compounded by the refusal of names to meet cash calls.
The letter states: "Nearly 40 per cent of the amount called in on the 1990 account and nearly 30 per cent on the 1991 account remains outstanding."
It adds: "To avoid the need for an immediate cash call, we investigated all other possible sources of funds, including bank borrowing, which the syndicate's bankers were unable to provide."
Prematurely cashing the investments cost the syndicate a £1.6m penalty. New sources of cash will need to be found to meet these later claims. "Unless a significant proportion of these outstanding amounts is received over the next few months," the letter continues, "we may still have no alternative but to make a further cash call before July 1995."
It is understood that Lord Poole, the chief executive of Sturge, met Peter Middleton, the chief executive of Lloyd's, to discuss the problem and a request for help from Lloyd's central resources was turned down.
Lloyd's insiders have said the problems caused at Sturge by names refusing to meet their debts are also hitting large parts of the rest of the market.
Last week, we revealed that Lloyd's is concerned that it may fail its 1996 solvency test and be forced to shut it doors before the January start of the 1996 trading year.
Lloyd's problems are caused by up to 9,000 names defaulting on debts worth £1bn. To prevent closure, Lloyd's needs to ask names to put in more cash, over and above that needed to meet the losses of £8bn already reported by Lloyd's.
An insider said: "The problem we have is essentially one of cash, but that has an effect on our solvency position, too. To pass solvency in 1996, we must collect debt from members. We have to extract money from the 'won't pays'." He expected Lloyd's to ask names for £600m to bail it out.
Last week, Lloyd's market analysts, Chatset, predicted that the market would have to raise £1.5bn either from names or the Bank of England. Lloyd's denied that it would need to go to the Bank.
The insider commented: "This figure assumes Lloyd's failing to collect any of the outstanding debts."
Lloyd's has also embarked on an aggressive new debt-collection programme. The plan is to sue the "won't pay" names, bankrupting them if necessary. It is threatening Lloyd's agents with expulsion from the market if they failed to pursue names.
The insider said the rescue proposals will be announced well before the Lloyd's annual general meeting, due at the end of May.