Lloyd's punishes 175 members over losses

Lloyd's of London has punished around 175 working members of the insurance market it believes are responsible for very large losses or guilty of misconduct.

Underwriters of more than 30 syndicates, the directors and partners of their managing agents and the directors and partners of 20 members' agents will be refused around pounds 18m out of a possible pounds 32m in debt credits available under the market's recovery plan.

"Those individuals concerned will be notified of the restrictions affecting them later this month," David Rowland, chairman of Lloyd's, said yesterday.

Separately, Lloyd's said it was highly likely that names who reinsured old losses into the market's proposed recovery vehicle, Equitas, would receive some of their reinsurance premium back.

Ron Sandler, chief executive of Lloyd's, said after yesterday's annual conference of the Association of Lloyd's Members that it was "extremely probable" that names would receive return premiums from Equitas. Surplus funds left after liabilities were met would not be distributed in the form of dividends, but would be paid out "pro rata'' according to how much each name had paid for reinsurance.

However, for older names this could be too late. It might take decades, for instance, before the scale of long-tail liabilities from pollution- related claims in the US is known.

Until now, much of the attention on Equitas has centred on fears it might not be adequately reserved to meet future claims by policyholders, casting doubts on the recovery plan.

Under the reconstruction and renewal proposals, Equitas will shoulder the liabilities arising from all policies written up to 1993. Lloyd's has in the last five years announced more than pounds 8bn of losses.

Mr Sandler said the final cost to names of reinsuring into Equitas had fallen to just under pounds 900m from estimates of pounds 1.9bn.