View from City Road: Lloyd's confidence takes another knock

The latest doom-laden forecast for Lloyd's of London suggests the market is heavily under- reserved. The figures being used were prepared by two prominent Lloyd's underwriting members, Charles Sturge and John Rew, operating through an 'independent' company called Chatset, which specialises in the analysis of Lloyd's figures.

The figure, which looks alarming in terms of Lloyd's ability to pay insurance claims, may ultimately prove wrong. But the trend is worrying. According to Chatset, the number of years of accounts whose books cannot be closed now because of financial uncertainties amounts to 255 years. Set alongside Lloyd's entire trading history of 305 years, this is unlikely to inspire confidence.

Confidence is not shored up by Lloyd's admission that in the past there has been no coherent attempt to establish sound, centralised data on old-year liabilities. Detailed information is being collated with the help of three teams of external actuaries analysing syndicates' likely claims and known reserves for 1985 and prior underwriting years.

It is hard to believe that after three centuries of trading Lloyd's has been so wrong-footed on basic business practice. This will do its cause no good at all at a time when it is attempting to sell a pounds 900m offer to members.