Lloyd's Names face £44,000 cash call to meet cost of US attacks

Lloyd's names met last night to discuss their future role at the London insurance market after it emerged that cash calls averaging £44,000 are this week being made on the individuals who underwrite Lloyd's.

A total of £246m is being called in from Names to cover costs from the attacks on the World Trade Centre, as well as meeting other liabilities which have come in this year. Lloyd's has estimated its net liabilities from the US devastation at £1.3bn, while analysts say it could be substantially more. Moody's, the ratings agency, said the total industry bill could reach $70bn (£48bn).

Michael Deeny, the chairman of the Association of Lloyd's Members, arranged the meeting of Names to calm fears about the rising level of expected liabilities and to allow them to ask underwriters about next year's prospects. Mr Deeny stressed that those Names who stayed in the market would be in a strong position in 2002, as underwriting will become a lot more lucrative due to premium increases of anything up to 300 per cent.

He said: "Insurance rates were rising anyway and 11 September accelerated that trend. I believe the majority of Names will pay their cash calls and increase their underwriting next year."

New losses for remaining Names are sensitive as many in the past 10 years were bankrupted by some of the massive costs, including asbestosis claims from America between 1988 and 1992. But this time many Names only have a limited liability exposure and in most cases the cash calls will only require them to move money from a deposit account to that of their syndicate, rather than requiring them to raise new capital.

Most of the money will be used to fulfil US requirements that funds covering gross liabilities are stumped up before claims are actually made. The cash calls are less than they would have been under previous rules, as Lloyd's has negotiated to put up only 60 per cent of reinsurance liabilities, rather than the usual 100 per cent.