pounds 100m twist in tail as Lloyd's sets bell ringing

Three rings of the famous Lutine bell yesterday marked the arrival of the Lloyd's insurance market in a safe port, after Anthony Nelson, the trade and industry minister, gave formal approval to the pounds 3.2bn rescue.

But in a surprise late demand, Mr Nelson insisted that Lloyd's give an assurance that it is prepared to find up to pounds 100m in the period to January 2002, to top up the pounds 1.68bn reserves of Equitas, the new reinsurance company at the heart of the rescue.

Mr Nelson said the pledge was required in case interest earnings on Equitas's investments were lower than expected or there was a shortfall in contributions from agents or brokers.

David Rowland, chairman of Lloyd's, said: "Our regulators have driven hard bargains all the time."

He described the extra money as "one more piece of belt and braces that the DTI thinks necessary". But he declined to say whether the names who are members of the market would have to pay.

Mr Rowland was speaking after presiding over a variation on the celebrated Lloyd's ceremony of ringing the Lutine bell once for a disaster and twice for good news.

The first of the three rings was a reminder of the pounds 8bn losses at Lloyd's and the other two were to announce the good news of the rescue.

Mr Rowland said: "I wanted to mark the difference. Once for sorrow and twice for joy was in the history of Lloyd's. This is a very special occasion.

"The most important thing for the market to remember is how close we came to not surviving, and the reasons for it," he told a packed meeting of thousands of Lloyd's professionals in the underwriting room in the insurance market's headquarters in Lime Street, to loud applause.

The bell has been rung more than twice on a previous occasion, though that was when it was rung four times in 1994 for the performance of a specially composed piece of music. The last time it was rung twice as a result of good news from the ocean was in 1981 when an overdue Liberian ship was found.

And the last time it was rung once for a maritime disaster was when wreckage of the tanker Berge Vanga was found in the South Atlantic in 1979.

As a result of the completion of the rescue, Equitas is to re-insure all Lloyd's pre-1992 liabilities, which were pounds 14.7bn at the end of last year.

Claims payments since then have reduced the total to about pounds 11.5bn.

Mr Nelson said that since he conditionally authorised Equitas in March there had been an overall strengthening of its financial position.

The process of transferring money to finance these liabilities can now proceed, including trust funds held in the US by the New York Insurance Department, which has also agreed the rescue and is to continue to be given Lloyd's financial data to monitor. Yesterday the department approved a transfer of pounds 3.5bn.

Mr Nelson said there would be a review of Lloyd's regulation, but it would be deferred until after the election. He expected changes to be made to the whole system of financial regulation and any reforms at Lloyd's would have to be studied in that context.

Mr Nelson is to introduce new regulations in Parliament shortly which will clarify the regulatory position for names who wished to leave the market but have been unable to do so until Equitas starts operating.

Lloyd's is expected formally to pass its annual solvency test at the DTI in the next few days.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Software Development Manager

£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Day In a Page

As in 1942, Germany must show restraint over Greece

As in 1942, Germany must show restraint over Greece

Mussolini tried to warn his ally of the danger of bringing the country to its knees. So should we, says Patrick Cockburn
Britain's widening poverty gap should be causing outrage at the start of the election campaign

The short stroll that should be our walk of shame

Courting the global elite has failed to benefit Britain, as the vast disparity in wealth on display in the capital shows
Homeless Veterans appeal: The rise of the working poor: when having a job cannot prevent poverty

Homeless Veterans appeal

The rise of the working poor: when having a job cannot prevent poverty
Prince Charles the saviour of the nation? A new book highlights concerns about how political he will be when he eventually becomes king

Prince Charles the saviour of the nation?

A new book highlights concerns about how political he will be when he eventually becomes king
How books can defeat Isis: Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad

How books can defeat Isis

Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad
Judith Hackitt: The myths of elf 'n' safety

Judith Hackitt: The myths of elf 'n' safety

She may be in charge of minimising our risks of injury, but the chair of the Health and Safety Executive still wants children to be able to hurt themselves
The open loathing between Barack Obama and Benjamin Netanyahu just got worse

The open loathing between Obama and Netanyahu just got worse

The Israeli PM's relationship with the Obama has always been chilly, but going over the President's head on Iran will do him no favours, says Rupert Cornwell
French chefs get 'le huff' as nation slips down global cuisine rankings

French chefs get 'le huff' as nation slips down global cuisine rankings

Fury at British best restaurants survey sees French magazine produce a rival list
Star choreographer Matthew Bourne gives young carers a chance to perform at Sadler's Wells

Young carers to make dance debut

What happened when superstar choreographer Matthew Bourne encouraged 27 teenage carers to think about themselves for once?
Design Council's 70th anniversary: Four of the most intriguing prototypes from Ones to Watch

Design Council's 70th anniversary

Four of the most intriguing prototypes from Ones to Watch
Dame Harriet Walter: The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment

Dame Harriet Walter interview

The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment
Art should not be a slave to the ideas driving it

Art should not be a slave to the ideas driving it

Critics of Tom Stoppard's new play seem to agree that cerebral can never trump character, says DJ Taylor
Bill Granger recipes: Our chef's winter salads will make you feel energised through February

Bill Granger's winter salads

Salads aren't just a bit on the side, says our chef - their crunch, colour and natural goodness are perfect for a midwinter pick-me-up
England vs Wales: Cool head George Ford ready to put out dragon fire

George Ford: Cool head ready to put out dragon fire

No 10’s calmness under pressure will be key for England in Cardiff
Michael Calvin: Time for Old Firm to put aside bigotry and forge new links

Michael Calvin's Last Word

Time for Old Firm to put aside bigotry and forge new links