Inquiry into 100m pounds Lloyd's losses

A wide-ranging inquiry into how more than pounds 100m of losses occurred on two Lloyd's of London insurance syndicates under the management of the former Devonshire Underwriting Agency has been commissioned by an action group representing up to 1,800 Lloyd's members affected by the syndicates' problems.

Trinity Square Services, an insurance investigating agency, and a firm of accountants have been commissioned to investigate how the losses arose.

Further momentum to the underwriting members' inquiries will have been added by a critical internal interim report prepared by a committee headed by Anthony Blake of the accountants Neville Russell. The full findings of the report, commissioned by Lloyd's, are not expected to be completed until later this year.

Christopher Stockwell, one of the members of the stricken Devonshire syndicates 216 and 833/834, who also heads a committee co- ordinating the work of all action groups on troubled syndicates, said at the weekend that it was likely that later this autumn members would issue writs in connection with the losses against those who looked after their affairs at Lloyd's.

The interim report prepared by Mr Blake notes that the losses of the two syndicates have been exacerbated because:

Several reinsurers where the syndicates laid off their risks have been slow in paying the claims of the syndicates or have not paid at all.

The reinsurance protection of the syndicates was inadequate.

The report also notes that Lloyd's General Review Department, part of the market's regulatory services, reviewed Devonshire's management in October 1990 and November 1990.

The review department's report, finalised in February 1991, noted 'the board (of Devonshire) is not properly discharging its collective responsibilities under the managing agents agreement (byelaw 8/88)'.