Equitas selects managers to look after pounds 7bn

In one of the largest fund management deals in British history, Equitas, the vehicle for the rescue of the Lloyd's insurance market, yesterday appointed nine managers to look after more than pounds 7bn of assets.

Each will have between pounds 500m and pounds 1bn to look after, once the pounds 3.2bn rescue plan for Lloyd's has been approved by the market's members next month.

The money is part of the pounds 14.7bn of assets Equitas is taking over in its role as insurer of the losses of Lloyd's syndicates for the years up to 1992. The assets are being put into Equitas to pay claims against Lloyd's, at the same time insulating members from past losses.

In the UK, the winning managers are BZW Investment Management, PDFM, Prudential Portfolio Managers and Mercury Asset Management, which was appointed by Equitas in May as the manager handling the transfer of the funds to Equitas.

In the US, where a majority of the claims against Equitas will come from, the managers are Black Rock Financial Management, Scudder Stevens & Clark, Wellington Management Company and Zurich Investment Management. RT Capital Management will handle Equitas investments in Canada.

More than half the funds, which are all fixed-interest, will be managed in the US. The intention is to allocate them to different countries in proportion to the likely claims against Equitas.

Equitas plans to stick to fixed-income investments at the outset, but Jane Barker, finance director, said the company might at some stage invest part of its assets in equities.

Equitas will not have the full pounds 14.7bn on its balance sheet to invest, partly because more than pounds 4bn is in the form of reinsurance recoveries rather than cash.

Some claims have also been paid since the end-1995 balance sheet date at which the pounds 14.7bn was calculated, and more are likely to be settled by the time the funds are transferred to the nine managers.