His criticisms came as the underwriting community at Lloyd's, which has suffered pounds 5bn worth of losses in the last three years and faces a further pounds 1bn drain next year, was cooling towards the business plan announced last week.
Lloyd's ambitious scheme is to reduce costs, improve profitability and bring in more money to back the underwriting business. For the first time, the market plans to allow companies with limited liability to participate, in order to boost investment. Lloyd's hopes to make pounds 900m by the 1995 trading account, compared with the pounds 2.8bn worth of losses it expects to publish for the 1990 account.
However, Mr Posgate attacked Lloyd's profitability forecasts. 'The targets suggest that the Lloyd's authorities have a hotline to God. It assumes that the market will have no claims on hurricanes and windstorm damage and other big catastrophes. I know that Peter Middleton (the present chief executive) is a former monk, but even a relation of mine who was a mother superior did not have a hotline to God.'
Mr Posgate's toughest criticism was reserved for the admission of corporate capital into the market. Until now, Lloyd's has been exclusively supported by individuals pledging all their wealth to allow the market to function. In return, they receive a share of the profits. However, they have to pay up from their own resources if there is any shortfall in funds at Lloyd's when claims have to be met.
Mr Posgate, 60, said: 'I resent becoming a second-class citizen in the new regime.' Mr Posgate's family has an investment of pounds 12m in the Lloyd's insurance market. Along with his family, he participates in insurance syndicates exposed to the notorious 'open' years - trading accounts that cannot be properly audited because of the uncertainties surrounding the insurance claims flooding into the syndicates. Many members of his family participate in syndicate 745, where losses have reached pounds 129m. Mr Posgate's family faces losses of pounds 500,000 from exposure to the current losses.
In all, more than 80 per cent of Lloyd's total membership of 20,000 are marooned in syndicates with open years of account - which represent a combined 162 years of trading uncertainty for the membership.
Mr Posgate argues that he and his family would be supporting weaker members unable to meet their obligations at Lloyd's. All members have to contribute to a central fund, which stands at more than pounds 1bn, in order to provide protection for policyholders in the event of any financial failure.
'Why should companies be allowed into the market with a clean sheet to do business, when the existing members are bearing the brunt of the losses and all the consequences of the past?Reuse content