Treasury stands firm as Lloyd's Names voice bankruptcy fears

Click to follow
The Independent Online

Lloyd's Names are claiming they are still at real risk of bankruptcy, despite last year's deal to remove outstanding liabilities.

The campaigning group exlloydsnames.com wrote to Ed Balls, Economic Secretary to the Treasury, asking for a meeting to discuss its concerns. However, Mr Balls is understood to have turned down the request and the group is now considering petitioning Parliament directly.

The growing row, which centres on a controversial statutory instrument, is the latest twist in the long-running Lloyd's Names saga. Between the 1940s and 1970s, Names underwrote general liabilities for companies through Lloyd's of London syndicates. They initially enjoyed healthy returns, but in the 1980s they were besieged by claims, primarily related to asbestosis.

The Lloyd's of London insurance market was also hit hard, and in 1996 it set up Equitas to cover its near-overwhelming liabilities from before 1992. Equitas's reserves run into billions but some fear that will not be enough - in which case, Names will have to stump up more cash. Few are in a position to do so.

Last October, Berkshire Hathaway - the investment vehicle controlled by US billionaire Warren Buffett - agreed to take on Equitas's liabilities, staff, operations and most assets.

But Sir William Jaffray of exlloydsnames.com said liabilities would not be fully removed until the deal was completed, which could be 2009.

He is therefore fighting the statutory instrument that he claims removes the right of Names to fight bankruptcy orders against them. "It provides a fast-track bankruptcy regime for Names in the event of Equitas's reserves running dry. It must be amended or repealed to give Names... closure... Some 34,000 families' futures are at stake."

But a Treasury insider said: "They are proposing we change the law in anticipation of the [Berkshire Hathaway] deal. But you cannot pre-judge how commercial transactions will go."

Comments