Names attack market chiefs

Battle rages for the soul of Lloyd's
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LLOYD'S of London Names launched an unprecedented public attack on the market's executives yesterday, accusing them of pandering to black propaganda designed to force Names out of the market.

The Association of Lloyd's Members, which represents more than 5,000 Names, denounced what it called "the increasingly aggressive campaign to remove the trading rights of Names and other members of Lloyd's in favour of permanent corporate capital".

Sir David Berriman, chairman of the ALM, said: "There is a battle going on here for the soul of Lloyd's. The meetings I have had with the Lloyd's chairman [Max Taylor] do not put my mind at rest."

The Names said the future of Lloyd's had once again been thrown into doubt because the chief executive of Lloyd's, Ron Sandler, was thinking of abandoning the means by which they invest in Lloyd's. They said his plans amounted to "a frontal attack" on the policies of Lloyd's Council, the body which governs the market.

Mr Sandler angered Names last month when he made a speech casting doubt over the future of the annual venture, the centuries-old system by which Names adjust their exposure to the market every year.

Because syndicates never know if their Names will stick with them, they have to re-capitalise every year with a fresh list of financial backers. Mr Sandler claimed this brought in costs which made Lloyd's uncompetitive, reducing returns by approximately 2 per cent a year. It could also stop syndicates from underwriting long-term risks, he said.

But the Names said that Mr Sandler was falling prey to "some elements in Lloyd's" who wanted Names removed altogether. They said managing agents at Lloyd's found the annual venture cumbersome, preferring the permanent backing that came from corporate capital.

"I am filled with horror at the future prospect of a bourse of mini-insurance companies trading under the Lloyd's umbrella with limited liability ... Names' trust and confidence has been undermined and must be quickly restored," Sir David said.

The ALM said Mr Sandler's remarks had reduced the value of their trading rights because they fuelled speculation that these rights would soon be worth little. They said the Treasury supported this criticism.

The Names also said they could lose hundreds of millions of pounds in lost tax breaks if they were forced out, because Lloyd's liabilities could not be set against non-Lloyd's assets.

Mr Sandler is accused by the Names of neglecting his collective responsibility as a member of Lloyd's Council. The council's current policy is to keep the annual venture and safeguard Names' trading rights.

Michael Deeny, a director of the ALM, said: "Mr Sandler is in a difficult position because he has a responsibility to safeguard the interests of any oppressed minority. That is exactly what we are beginning to feel like."

Since Lloyd's began its reconstruction and renewal programme in 1996, corporate members have become its main source of capital, providing 60 per cent of the market's underwriting capacity. Whereas in 1990 there were 30,000 Names, now there are just 7,000.