Lloyd's in danger of break-up, says report

LLOYD'S of London may be breaking up because good companies operating in the market will be reluctant to support others with losses caused by bad management and poor underwriting, writes John Moore.

The warning was given yesterday by Chatset, an organisation backed by a group of Lloyd's underwriting members which carries out extensive studies of the returns made for the market's investors.

Chatset reported that the worst performing syndicate for the 1990 trading account, the latest completed trading period, was 745, under the management of KPH Underwriting Agencies. The syndicate, which the Independent revealed yesterday was the subject of a top-level Lloyd's investigation, produced losses for its 1,700 underwriting members of pounds 27,500 for every pounds 10,000 invested.

Members of 745 include the estate of the late racing driver James Hunt, the MPs Sir Nicholas Lyell, Tristan Garel-Jones, James Arbuthnot, Henry Bellingham, Anthony Steen, David Tredinnick and Neil Thorne, Lord Bethell and Lord Denham.

Chatset warned that Lloyd's 20,000 names (underwriting members) would have to find a further pounds 3bn from their own resources to meet underwriting claims over the next three years, with an additional pounds 1bn- pounds 2bn to fund any shortfall in a new company set up to settle all outstanding liabilities on past insurance accounts.

'What remains debatable is the names' ability to find this cash with little help from outside bodies . . . Lloyd's existing strategy of abandoning existing names unless they continue underwriting relies heavily on the goodwill of burnt-out names in endeavouring to pay their losses,' Chatset added.