Solvency crisis at Lloyd's, says DTI
Sunday 09 April 1995
The letter, written to a name and signed by a senior civil servant at the DTI, implies that names, the individuals whose private wealth supports the market, could face a cash levy within the next few months.
It refers to the two annual solvency tests that Lloyd's must pass: the market-wide "global" test and a second one.
The letter reads: "Lloyd's is also subject to a second solvency test that the names separately must demonstrate that their insurance assets exceed their insurance liabilities. This test stands alone and is a precondition to the global test. This test is giving rise to some difficulty."
The letter also says that the problem can be resolved "by some well-known solutions within Lloyd's gift" - a reference to the need for a levy on the market's members.
The admission by the DTI that Lloyd's has a solvency problem is a reversal of the position it took at a hearing of the Treasury select committee in February.
The problem arises because of non-payment of losses by approximately 7,000 insolvent names. A name is insolvent at Lloyds when underwriting losses exceed his or her known assets.
At 2 September last year, this group of 7,000 had liabilities worth £1.35bn more than their assets. This figure is understood to have fallen to only £1.1bn by early 1995. European insurance law requires that the Lloyd's market maintains sufficient assets to cover this shortfall. It appears that the DTI now believes this will not be the case at the time of the next solvency test in late August.
It is understood that Lloyd's is to link the call for more cash from names with the offer of an amnesty on all future losses arising out of business written before 1993.
- 1 'Not suppost to cry': 9-year-old lists the worst things about being a boy
- 2 To help fuel their propaganda machine against the poor, our government has now decided to redefine the word 'welfare'
- 3 Woman opens professional cuddling shop – gets 10,000 customers in first week
- 4 Lana Del Rey rape video: Marilyn Manson denies involvement in shocking leaked footage
- 5 Kenya bus attack: Al-Shabaab militants kill 28 non-Muslims who failed to recite Koran
Rochester by-election: Ukip gains second MP as Tory defector Mark Reckless holds seat
'Beast of Bolsover' Dennis Skinner takes Ukip MP Mark Reckless to task moments after he is sworn in
Rochester by-election: Labour MP Emily Thornberry resigns after posting white van and England flags tweet
France 'blocks' Russian sailors from boarding a warship
Revealed: How the world gets rich – from privatising British public services
Myleene Klass: Ed Miliband 'strikes back' by comparing UK's need for Labour's mansion tax to Hear'Say track
iJobs Money & Business
Voluntary Only - Expenses Reimbursed: Reach Volunteering: Age Concern Slough a...
Voluntary Only - Expenses Reimbursed: Reach Volunteering: Crossroads Care is s...
£20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...
£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...