Rapid rescue needed

Click to follow
The Independent Online
THE wrangling at Lloyd's seems to have given way to a new sense of realism about the names' debts, writes William Gleeson.

The debt collectors are currently doing deals that allow names to walk away with something and a guarantee from Lloyd's that they will not pursued for more - if they agree to settle their losses.

Most of the ingredients of the settlement to be offered to names are already available. However, names are cautious about approaching the debt collectors individually, scared they will end up agreeing to a less favourable deal than might be available from a general settlement.

If the plan is successful, there will be a Lloyd's trading on in to 1996 and beyond. A declining number of names will continue to write insurance business at Lloyd's, and corporate capital will play a larger role.

But the rescue has to be put together quickly and is fraught with difficulties. Failure is beginning to look increasingly possible. This is unlikely to mean the end for the 60,000 people employed in and around the market. The better Lloyd's busi- nesses will probably continue in some form or other. Whether they continue at Lloyd's depends on a solution being agreed that will enable the market to continue trading.

It also depends on whether the existing underwriting businesses wish to continue to support Lloyd's. But if the market fails, these people will start afresh. After all, they have insurance-related skills that will always be in demand.

Some would view such developments positively, allowing them to get away from the problems of the past, the fraud slurs, the losses, the litigation threats and the attendant bad publicity. Others, inevitably, will regret the passing of a hallowed City institution.

In the end, closing down Lloyd's may turn out to be the quickest, least painful and perhaps the only solution to the market's long-running troubles.