Some 30,000 former investors in the Lloyd's of London insurance market are to share in an initial payout of £50m from the sale of Equitas to Warren Buffett's Berkshire Hathaway, it was revealed yesterday.
Equitas, the rescue vehicle set up 10 years ago to save the Lloyd's insurance market from collapse, struck a deal with Mr Buffett's company in October which will see the members of Equitas finally freed of any potential future claims.
As part of the deal, the Names who invested in Equitas are to share in two payouts, the first of which will be £50m, and the second of which will be up to a further £80m.
Equitas was set in 1996 as part of a deal to prevent the Lloyd's market from collapsing following huge losses on pollution and asbestos-related claims. Most Lloyd's Names - individuals who had invested in, and previously underwritten, the Lloyd's market - agreed to collectively pay billions of pounds into a new company, Equitas, to relieve them of their liabilities.
Although Equitas has always insisted that it has sufficient reserves to meet all potential claims, there has always been a concern that a bad turn of events could see its reserves wiped out, leaving the Names forced to put up new money.
If the current deal successfully completes, Berkshire Hathaway will take full responsibility for all future claims.
Equitas will hold three consultation meetings in January, giving all those affected a chance to discuss the deal. They will be held in Edinburgh, Manchester and London on 15, 18, and 19 January respectively.
For the deal to complete, it be approved by the Financial Services Authority, the Superintendent of Insurance in the State of New York and the Equitas Trustees, before 31 March.Reuse content