Lloyd's names face pounds 1.7bn bill for 1991 losses: Chairman announces fourth year of problems, but says latest shortfall 'more widely spread than in previous years'

LLOYD'S names - the individuals who provide the insurance market's capital - will face a call for pounds 1.7bn in July following the announcement of losses for the fourth year in succession.

David Rowland, chairman, confirming losses of pounds 2bn, said: 'The loss is more widely spread than in previous years, which will make it easier to recover.'

Christopher Stockwell, chairman of the Lloyd's Names Associations Working Party, said: 'It will result in a substantial number of names having to leave the market. More and more people are ceasing to be part of the profitable future.'

The number of names has fallen from 26,539 in 1991 to 17,525 this year. It is expected to fall further, even though Lloyd's recently announced help in the form of a credit against future profits to offset losses.

The 1991 loss, reported as usual three years in arrears, was pounds 2.5bn - or just over pounds 2bn, adjusting for the double counting of claims within the market. Although lower than the previous year's adjusted pounds 2.3bn figure, it brings the cumulative total to pounds 6.7bn.

Mr Rowland said: 'It was pounds 2bn more than we would like to lose, but there are encouraging trends looking forward.'

He said trading conditions now were as good as any since the mid- 1980s. While 1991 had been a difficult year for all insurers, the market was trading at a substantial profit in 1993.

Lloyd's 1994 underwriting capacity, at pounds 10.9bn, is 3.6 per cent lower than in 1991, despite the provision of pounds 1.6bn this year by new corporate members.

The market's shortfall on pure 1991 underwriting business was pounds 615m, an improvement on 1990's pounds 937m. Lloyd's made losses in its marine, non-marine and aviation businesses. Only motor insurance showed a small profit.

Other insurers also made big underwriting losses in 1991. The UK insurance industry, excluding Lloyd's, lost an amount equivalent to 12 per cent of premium income.

Lloyd's loss margin of 33 per cent was amplified by greater exposure to catastrophes - 1991's biggest was Typhoon Mireille in Japan and the year saw 29 altogether.

Andrew Pitt, insurance analyst at BZW, said: 'It was also a recession year, with a lot of claims for arson and theft. It was the nadir of the insurance cycle.'

The biggest part of Lloyd's total 1991 loss consisted of an increase in reserves of pounds 1bn to meet claims relating to asbestosis and pollution - and also an expected settlement on claims against the manufacturers of silicone breast implants.

There was a pounds 678m top-up for long-tail claims in 1990's results. Lloyd's said its reserves now matched the best in the industry.

Some observers have suggested that Lloyd's might need to raise more through a special general levy on names in order to meet its solvency requirement by the September deadline and to continue trading next year. It levied more than pounds 500m in this way in 1992.

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