Lloyd's faces backlash over US names deal
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Lloyd's of London has bought off the opposition of US state securities regulators to the pounds 3.1bn rescue of the insurance market with a pounds 40m payment that will improve the offer to American members by 20 per cent.
The announcement of a special deal for the 2,700 US names, who will now receive better treatment than their UK counterparts, is likely to outrage rebel names. They have been threatening to rock the boat ahead of the market's crucial annual meeting on Monday.
The rebels include the Paying Names Action Group, which yesterday threatened to go to court for a judicial review of the rescue. It was among more than six dissident names organisations that met yesterday to consider their next step in fighting the Lloyd's rescue plan.
The action group said, before the pounds 40m special deal was announced, that the existing Lloyd's rescue package discriminated unfairly against names who had paid their losses in full. Christopher Stockwell, head of the Lloyd's Names Association Working Party, said: "The effect of the package is a substantially better deal for the US names."
Ron Sandler, chief executive of Lloyd's, said the market had been faced with a very uncomfortable choice, because it had a responsibility to treat members uniformly and fairly.
He added: "We are very conscious that we run the risk of criticism that we have given preferential treatment to one particular group of names. Having said that, we cannot ignore the actions taken by state officials."
The agreement announced last night was with US state securities regulators operating through a body called the North American Securities Administrators Association Co-ordinating Committee.
The securities regulators in individual states had won a series of orders in US courts blocking communication between Lloyd's and its American members, arguing that the rescue plan involved the issue of securities in the US.
In tense negotiations over the last 10 days, Lloyd's has agreed to pay up to pounds 40m to the state regulators for them to distribute among US names, under a formula that the regulators will agree among themselves.
The pounds 40m represents 20 per cent of the pounds 200m that US members of the market are currently due to pay in "finality" bills to settle their losses at Lloyd's. The money will come from a pounds 300m syndicated loan agreed already between Lloyd's and its banks, and will ultimately be repaid from the market's future earnings.
In return, the state securities regulators have agreed not to block the offers to US names, not to interfere in any way with the US names' participation in Equitas - the reinsurance company that will take on the market's past losses - and "not to take any action to prevent the implementation of the [Lloyd's] reconstruction plan".
The securities regulators in individual states must sign up to the deal by 1am British summertime on Sunday, or it will lapse. The agreement will not take effect unless it is agreed by states representing at least 80 per cent of US Lloyd's names involved in the rescue. The pounds 40m will be reduced should all states not sign up.
David Rowland, chairman of Lloyd's, said: "This agreement removes the final significant obstacle to the resolution of our past problems ... Our members in the United States will now be able to share in the benefits of the reconstruction plan on a comparable basis to members elsewhere."
Mr Sandler, challenged to explain how comparability could be maintained after the extra pounds 40m, said: "I don't believe there is any element of unfairness in the reconstruction and renewal offer."
Responding to the threat of a judicial review, he said: "That avenue has always been open to them. We have been at great pains to see that everything that has been done meets the test of fairness and reasonableness."
The Lloyd's rescue plan was backed by the committee acting for the largest group of 3,000 litigating names, the Gooda Walker Action Group, whose chairman, Michael Deeny, acknowledged that "the settlement offer is, at best, rough justice, and some very rough justice indeed".
Gooda Walker names will receive pounds 524m in the settlement, 97 per cent of their losses.
Comment, page 23
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments