Lloyd's chief resigns to take up post in the City

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Financial Editor

Lloyd's of London, the troubled insurance market, was stunned last night by the resignation of Peter Middleton, its chief executive. His departure for a pounds 750,000-a-year investment banking job in the City, two years before his contract was due to expire, hits Lloyd's at a critical stage in its fight for recovery.

Buffeted by more than pounds 8bn of losses in recent years, and by costly litigation of thousands of angry names, the world's biggest insurance market is involved in a race to negotiate a settlement of its difficulties.

Mr Middleton, 55, who was on a pounds 330,000 package at Lloyd's, is to become the chief executive for the UK and Europe at Salomon Brothers, a leading US investment bank. He leaves Lloyd's at the end of this month.

He is to be replaced by Ron Sandler, 43, appointed earlier this year to implement the insurance market's pounds 6bn rescue and reconstruction programme.

This is seeking a cessation of all litigation, offering names a final payment, which would put an end to all their liabilities. Alongside David Rowland, the chairman, Mr Middleton was the linchpin in the attempt to negotiate peace and restore Lloyd's battered credibility.

"Lloyd's must be more fragile than we thought. This sends out all the wrong signals to the market, John Rew, head of the Sturge names action group, said: "Peter Middleton has voted with his feet."

Insurance market insiders said there had been a deterioration in Mr Middleton's relationship with MrRowland.

"Everybody will say that this is the insiders pushing an outsider out, but that is absolute rubbish. This was a voluntary decision on my part," Mr Middleton said.

He informed Mr Rowland only last Friday of his decision to leave. Mr Sandler moved last night to limit the damage, saying he hoped names "will not misinterpret this as a statement about the prospects of the recovery programme".

Middleton resigns, page 24