Members of oldest Lloyd's syndicate join the writ list

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The Independent Online
THE QUEUE of legal actions against Lloyd's of London agencies lengthened yesterday with a writ issued on behalf of 1,055 investors in the market's oldest syndicate.

The members of the Cuthbert Heath Names Association are suing 81 defendants - including Cuthbert Heath Underwriting, the managing agency that placed them on non-marine syndicate 404, and Arthur Andersen, the syndicate's auditors. They are claiming for losses from 1989 to 1992 and an indemnity against future increases in losses for those years.

The syndicate, opened in 1888, was closed at the end of 1992 because of its huge exposure to old US asbestos and pollution claims. These are known as long-tail claims because the claim against the insurers can be made years or even decades after the policies were written.

Its losses for the open years of 1989 and 1990 had reached pounds 79.2m and pounds 8.4m respectively by the end of last year, with the 1989 loss equivalent to 103 per cent of its capacity. The names estimate that the syndicate could face additional losses of nearly pounds 300m.

Alan Porter, chairman of the Cuthbert Heath Names Association, said: 'Our members have suffered severely as a result of what we believe to be the mismanagement of syndicate 404, and we are determined to obtain redress.' He said the association believed the defending managing agents and auditors had either enough money or enough errors and ommissions insurance cover to meet the claim.

The writ alleges that the syndicate should have left earlier years open because it was possible to identify the long-tail problems as far back as 1978 or 1979. It also alleges misrepresentation of the financial position of the syndicate and inadequate reserving.

Mr Justice Cresswell said this week that there were 13 long-tail groups claiming about pounds 2bn from Lloyd's agencies and auditors.

The number of Lloyd's cases further ahead in the queue means the Cuthbert Heath case is unlikely to be heard until 1996. A claim brought by 3,095 Gooda Walker names for damages of pounds 629m is being heard in the High Court, with closing arguments due next week and a judgment likely to follow in the autumn.