Package to rescue Lloyd's wins backing

JOHN EISENHAMMER

Financial Editor

Lloyd's of London has found broad-based support for its massive rescue package among investors in the insurance market, according to a survey carried out for it by Mori.

The survey showed that 63 per cent of respondents said they viewed favourably the pounds 6bn restructuring package, aimed at enabling a "new Lloyd's" to trade profitably into the future by drawing a line beneath the huge losses of the past that have ruined countless investors.

The package will allow investors to make a final contribution to Lloyd's, which will end all their liabilities. It will be combined with an agreement to cease all litigation against the society.

The survey found that 88 per cent of members know about the plan, launched in May. A key part of this plan is the setting up of Equitas, a new reinsurance company into which all of Lloyd's policies written before 1993 will be placed.

The main reasons for the favourable response to the survey are that it amounts to an improvement on previous proposals, it will cap liabilities, it will bring the whole traumatic affair to a conclusion, and it will help Lloyd's to continue.

Some 65 per cent of respondents said they are likely to support the plan. Respondents said the proposals will be most advantageous to continuing investors, market professionals, and those investors' action groups that have challenged Lloyd's in the courts over the massive losses sustained in recent years.

Since 1993 the proportion of members actively underwriting has fallen from 81 to 50 per cent and the survey showed that only around 45 per cent are likely to continue underwriting in the future.

The survey was carried out in late July, and covered a sample of 100 investors.