View from City Road: Lloyd's members should keep on fighting

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The Independent Online
In the next few weeks, the 17,000 underwriting members of Lloyd's who are threatening to sue over their losses should know precisely what the market authorities think of them.

Thousands of investors who have participated in an institution that boasts of conducting itself with the 'utmost good faith' are eagerly expecting an offer that goes some considerable way to compensating them for the losses of pounds 5.5bn they have suffered so far.

According to a document published in May this year, marked 'strictly private and confidential - privileged', Lloyd's said: 'In all cases, we understand names (the underwriting members) are claiming 100 per cent of the loss they have suffered.' The names should not hold their breath.

That document was put forward by Simmons & Simmons and the LEK Partnership, advisers to an errors and omissions underwriters panel designed to resolve the disputes at Lloyd's. The insurers were advised by lawyers that they would be expected to pay in the event of any out-of-court settlement. Under the terms of an injunction this week, the Independent cannot go further on these matters.

At all levels within and outside Lloyd's it is agreed that some of the worst losses that have been incurred have a strong chance of success in the courts. The most serious cases, according to the May document, add up to around pounds 2bn of losses that would be contested in the courts. Any settlement offered by Lloyd's is estimated to be worth just over pounds 260m. Perhaps the names should fight their cases through, after all.

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