US approvals allow Lloyd's rescue to go ahead

Lloyd's has cleared the last regulatory hurdle ahead of its key annual meeting in London today, confirming yesterday that it had received the approval of just enough US securities regulators to allow its pounds 3.1bn rescue to go ahead.

By a deadline for agreement set at 0100 British Summer Time yesterday morning, Lloyd's managed to win the approval of regulators in states where 84 per cent of US members reside, 4 percentage points above the minimum required for the agreement to take effect.

A number of US states, including Missouri, refused to sign up over the weekend to the pounds 40m deal, which had been agreed in outline with a committee of US regulators on Thursday afternoon.

The annual meeting in the Royal Festival Hall today will be asked to approve a pounds 440m contribution by 34,000 members to the pounds 3.1bn rescue, the first in a series of votes on the package by action groups and individual members which stretch out to the end of August.

An extraordinary general meeting in the same venue, requested by rebel members, will also vote today on motions to improve the offer substantially. The Lloyd's authorities expect, on the basis of opinion polls, to win both votes comfortably, but if they lose the rescue attempt may have to be be called off.

The US committee had little more than 48 hours to win the signatures of individual US states and Lloyd's intends to try to persuade those that have not signed to change their minds.

Lloyd's had been forced to negotiate with the US securities regulators because they had issued a series of orders that had the effect of blocking the rescue offer to the insurance market's 2,700 US members, a minority of the 34,000 total.

Lloyd's agreed to pay up to pounds 40m to the US regulators in return for their agreement to drop all actions against the market. The regulators are to use the money to improve the offer to US names by more than 20 per cent, giving them a better deal than the rest of the membership.

Confirmed acceptances include seven states where 1,674 members reside, 62 per cent of the US total. These are New York with 321 and California, with 555 - the two biggest - as well as Louisiana, Colorado, Texas, Illinois and Florida.

As well as gaining 80 per cent coverage of members, Lloyd's insisted that 18 named states sign up. Because many states have small numbers of members, the actual number of regulators refusing could still be quite large. Missouri, which refused, has 67 members.

A rejection by regulators covering 16 per cent of Lloyd's US members would only marginally reduce the cost of the deal. Last week, Ron Sandler, Lloyd's chief executive, said that if rejections amounted to up to 15 per cent, the credits would be recycled to regulators that did approve the deal. Beyond that level, the package will be reduced pro-rata.

Mr Sandler described the agreement to give US names preferential treatment as an "uncomfortable choice".

In a statement issued in New York, Peter Lane, managing director of Lloyd's in North America, said: "We believe this agreement with securities regulators recognises our mutual regulatory concerns and presents a sound and practical way to resolve all outstanding state disputes regarding Lloyd's."

He added that it was unfortunate that some regulators had not yet acted to gain the benefits for Lloyd's members within their states.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
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: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

Greece says 'No': A night of huge celebrations in Athens as voters decisively back Tsipras and his anti-austerity stance in historic referendum

Greece referendum

Greeks say 'No' to austerity and plunge Europe into crisis
Ten years after the 7/7 terror attacks, is Britain an altered state?

7/7 bombings anniversary

Ten years after the terror attacks, is Britain an altered state?
Beautiful evening dresses are some of the loveliest Donatella has created

Versace haute couture review

Beautiful evening dresses are some of the loveliest Donatella has ever created
No hope and no jobs, so Gaza's young risk their lives, climb the fence and run for it

No hope and no jobs in Gaza

So the young risk their lives and run for it
Fashion apps: Retailers roll together shopping and social networking for mobile customers

Fashion apps

Retailers roll together shopping and social networking for mobile customers
The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'
Compton Cricket Club

Compton Cricket Club

Portraits of LA cricketers from notorious suburb to be displayed in London
London now the global money-laundering centre for the drug trade, says crime expert

Wlecome to London, drug money-laundering centre for the world

'Mexico is its heart and London is its head'
The Buddhist temple minutes from Centre Court that helps a winner keep on winning

The Buddhist temple minutes from Centre Court

It helps a winner keep on winning
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate