Plan for Lloyd's names expected next month: Proposal to ease members' losses may not be enough to satisfy their demands
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Your support makes all the difference.A PROPOSAL from the authorities of Lloyd's to provide financial help for distressed underwriting members is expected to be ready at the end of next month, David Rowland, Lloyd's chairman, said yesterday.
The proposal is designed to aid 17,000 members of the market who have borne the brunt of pounds 5.5bn worth of losses over the past three years. Many have been brought to the brink of financial ruin.
Mr Rowland's assurance came following approval by Lloyd's members,in a historic vote on Wednesday, to allow companies to invest in the market as well as individuals.
However, the offer is unlikely to satisfy the demands of many members who want all their money back in an effort to stave off financial ruin. It is widely believed at Lloyd's that the members will be offered just 30p in the pound.
Following the vote on Wednesday for the admission of corporate capital Christopher Stockwell, chairman of the Lloyd's Names Associations Working Party, co-ordinating the efforts of nearly 40 action groups, warned that a settlement at that level 'would not be enough'.
The money that Lloyd's intends to offer as part restitution for the losses is coming from insurers who provided errors and omissions insurance for agency companies that looked after members' affairs. The insurers provided financial protection against suits for damages for the agency companies.
'I am quite optimistic in producing a settlement offer,' Mr Rowland said yesterday.
Mr Stockwell's organisation believes that resources of at least pounds 1.5bn are needed to achieve an acceptable settlement in addition to an estimated pounds 1bn available from errors and omissions insurers and Lloyd's central fund of last resort, which has more than pounds 1bn worth of funds.
'However, some further substantial contribution from Lloyd's central resources will be needed,' Mr Stockwell has said.
Unless Lloyd's can provide an acceptable settlement the members will continue to pursue legal action, which is not expected to be concluded until 1995. They allege that their losses arose through negligence or fraud.
If a settlement is not swiftly concluded it could affect the sentiment of 17 corporate capital vehicles that are seeking to inject more than pounds 1bn of money into Lloyd's.
Any prospect that future litigation could affect their investment might deter potential investors from providing new capital for the Lloyd's market.
Meanwhile, Mr Rowland regards the admission of corporate capital as a necessary step in rebuilding confidence in the market.
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