Market faces 'brutal' slimming

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The Independent Online
LLOYD'S expects the number of syndicates to fall below 200 by 1993 from the present 275, as smaller ones become uneconomic and merge to cut costs.

Figures published last week showed that expenses charged by syndicates soared 45 per cent to pounds 561m in the two years to 1989. This is almost a third of the losses in the latest reporting year.

But Lloyd's officials insist that the heavy losses are bringing almost daily rationalisation which should help to contain costs.

'The reductions are taking place because of the brutal effect of what is happening in the market,' said a Lloyd's source.

The number of names resigning is not as high as some forecasts, with the latest estimate only 1,600, leaving about 20,000 in the market for 1993.

The average capacity of each name - reflecting the amount of business taken on - is also rising rapidly, from pounds 340,000 in 1988 to pounds 455,000 this year. The leavers are less wealthy than average.

With a large number of stricken names on the Gooda Walker and other syndicates facing bankruptcy, officials are looking at ways of making Lloyd's own hardship procedures more attractive. At present, many names see the time limit on bankruptcy making it preferable to going to the hardship committee, which can be a burden for life.

In particular, Lloyd's is exploring whether the hardship procedure can be counted as an interim voluntary arrangement. This is a half-way stage in which negotiations are conducted with creditors to avert full bankruptcy - rather like administration for a company.

Neil Hamilton, the corporate affairs minister, praises Lloyd's in the latest issue of Lloyd's Log, calling it an important and valuable institution with some of the best underwriters in the world.

Lloyd's is increasingly hopeful that its council will secure a vote of confidence from members, in the results of a ballot to be announced this week.

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