Lloyd's Names close to £30m payback win

Around 500 Lloyd's of London Names are close to winning a settlement of up to £30m to cover some of their losses from policies written in the late 1990s from a company with links to Warren Buffett.

Around 500 Lloyd's of London Names are close to winning a settlement of up to £30m to cover some of their losses from policies written in the late 1990s from a company with links to Warren Buffett.

Lloyds suffered some of the worst results in its history between 1998 and 2003, when a series of natural disasters and the 11 September terrorist attacks led to massive insurance claims. All in all, the total losses for those five years exceeded £8bn.

Though Lloyd's had spent a great deal of time attracting corporate capital into the market, a sizeable number of individual investors, known as Names, remained.

They took out Stop Loss insurance to limit their downside. One of the major sets of policies was through a mutual group called Integer, which reinsured the policies though Euclidian, which managed a major insurance syndicate at Lloyd's.

This is the same company that tried to float on the stock market last year, with the hope of raising £125m. When that failed it was sold to a group controlled by famed US investor Warren Buffett, who is understood to have paid just £1 for the company.

When the Names came to claim on the policies, Euclidian said there were limits on the reinsurance and in some cases paid out only 10 per cent of the expected amount.

A group of 500 Names banded together as the Stop Loss Recovery Group and sued Euclidian just over a year ago, claiming they were mis-sold the reinsurance, a claim Euclidian denies.

Last year, Euclidian enjoined Integer and some members agents from Lloyd's to the action. This is despite none of the members' agents saying they were aware of the reinsurance limits when they recommended the Euclidian policies.

It is understood that the two sides are to go into mediation to avoid the case coming to court. The total shortfall being claimed by the Names is close to £30m, which does not include legal costs.