View from City Road: Lloyd's heading for victory

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The Independent Online
It may not be a complete walkover, but it looked last night as if Lloyd's would easily win agreement to an infusion of the corporate capital it seeks. A last attempt by aggrieved names to wring firmer compensation promises from the market authorities in return for their vote today appeared to have achieved little.

Some names will vote against the plan, but for many waiverers the temptation to punish the market will be held in check by the realisation that without new capital there will be fewer resources to settle their claims.

It is not that corporate capital will necessarily be used to pay them off. But without it the market could head into a spiralling decline, and making large claims would be about as useful as suing a dead sheep. This risk is likely to overcome understandable fears that safeguards for unlimited liability names will not be strong enough or that the market will evolve into a loose agglomeration of insurance companies.

Against the background of almost daily announcements about new plans over the past few months it is hard to remember quite how slender a straw this whole proposal was when first mooted. Far from disdaining the market because of its record, merchant banks have been falling over themselves to promote new corporate vehicles, and more than a dozen investment trusts are lined up.

Many of the proposals lack - as yet - essential detail. There is a serious risk that with so much money chasing Lloyd's, some new corporate investors will be forced to accept poor syndicates, and will regret at leisure. But given the corporate enthusiasm, it is better to have the money within Lloyd's than migrating to its rivals.

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