4 Jan 84

The Corporation of Lloyd's purchases Toplis & Harding Holdings Inc., Delaware. On 1 December 1981, the Lloyd's Asbestos Working Party, via an Elborne Mitchell market circular, addressed to all interested Underwriters, advised that an asbestos computer database had been established in the United States by Mendes & Mount, Lloyd's appointed Attorneys', with the assistance of Alexander Grant, computer consultants, and Toplis & Harding Inc., Chicago. Upon the advice of Lloyd's Solicitors' Dept., the Corporation sold Toplis & Harding Holdings Inc. to a management buy-out in July 1988. During the period 1984 to July 1988, the Corporation of Lloyd's wholly owned subsidiary controlled the U.S. Asbestos computer database.

Information Relevant to the operation of Sections 10, 11 and 12 of Lloyd's Act 1982 Byelaw (No. 1 of 1984, 9 January 1984).

Johnson County -v- United States Gypsum Co., 580 F. Supp. 284, Eastern District of Tennessee, January 9, 1984. On breach of warranty issue involving an asbestos property damage case, defendants prevailed based on statute of limitations. Plaintiff's negligence and strict liability claims survived summary judgement motion.

Letter from Attorneys to underwriter at interest. Re: Asbestos property damage litigation.

(An attorney's report dealing with coverage issues stated that the producers of asbestos products unquestionably will contend that all of the potential triggers apply, perhaps even a continuing trigger from date of first sale to date of last possible connection to damage, `a la Keene).

Various trigger dates of occurrence or the more limiting term, accident. ... Under the circumstances, the producers of asbestos products unquestionably will contend that all of the potential triggers apply, perhaps even a continuing trigger from date of first sale to date of last possible connection to damage, a la Keene. In our opinion, absent peculiar facts, there is no basis in the policy wordings or the case law to apply Keene-type reasoning to asbestos-related property damage claims. Whatever the trigger, it is a single, ascertainable event. Continuing damage cases involving multiple periods, like California Union Insurance Company -v- Landmark Insurance Company, 145 Cal. App. 3d 462 (1983), are inapplicable. We conclude that in light of the many contradictory judicial decisions on trigger of coverage in property damage cases, the most appropriate trigger in cases involving asbestos products, which are performing the purpose for which they were intended, is the period in which the damage - the diminution in value of the property - first becomes apparent.

1. Underwriting agency activities (which can be specifically insured);
2. insolvency of insurer etc.
3. Computer record loss (in relation to claims for loss of documents);
4. Claims from insurers in respect of agency or claims adjusting activities unless a legal award has been made against the broker;
5. Fines, penalties and punitive damages, but punitive damages additional to an excess and surplus claim can now be covered subject to additional premium

The brokers' requirement for errors & omissions cover is largely determined by the Insurance Brokers Registration Council and Lloyd's requirements for cover of at least six times annual brokerage with a minimum of £2m and a maximum of £20m, although a number of brokers buy higher limits to £40m and beyond.

1. Conduct business with good faith and integrity;
2. Do everything possible to satisfy the insurance requirements of the client;
3. Place interest of clients before all other considerations;
4. Have proper regard for others. In addition, advertising must not be misleading or extravagant.

Reinsurance:- The NMA Reinsurance Sub-Committee therefore considered that it would be in the Market's interest if the Reinsurance Market joined forces with the Asbestos Working Party, which at that time was acting solely for the direct Market. In view of Counsel's advice that reports from servicing Counsel should not pass through the broker, the Sub-Committee have made increasing use of the Asbestos Working Party's facilities.

In order to supply reserve recommendations to the Market prior to the year-end, servicing Counsel were instructed to supply a short form report showing reserve and expense recommendations only. Such reports were to be sent direct to the Asbestos Claims Information Office during November and early December. Full detailed reports containing all necessary and relevant information would follow, hopefully early in 1984.

The Reinsurance Asbestos Claims Sub-Committee study these reports with the object of maintaining continuity in the methods of reporting and to check the accuracy of the reserves: the Market Leaders are consulted and all reports require the Leaders' approval.

The Asbestos Claims Information Office now maintains the complete record of the Lloyd's and Company Markets, by year and layer, for each individual Reinsurance Contract handled through the Office.

When a report has been approved by the Leader/s and the Sub-Committee the Asbestos Office circulates the Market. This is done by copy report, together with a schedule showing the amount Underwriters' line is part of, by year and by layer. This procedure maintains the confidentiality, as recommended by Counsel.

Property damage:- it will be evident from the reports being received by the Market that property damage arising out of the use of asbestos is now developing into a major issue. The Environmental Protection Agency order has caused a substantial number of suits to be filed by municipalities in respect of public buildings and particularly schools which contain asbestos in their structure. To date litigation activity appears to be limited to this specific area, but bearing in mind the extensive use of asbestos for insulating purposes, it is reasonable to assume that claims over a broader field could develop.

Of equal importance to insurers is the manner in which any liability for property damage may attach. Insurers consider that only two bases may exist for determining which contracts respond; either the date of installation or the date of discovery of damage. To date it has not been necessary for Insurers to take a position on attachment of property damage claims. However, the problem will have to be addressed shortly, as a suit has recently been filed by GAF in Los Angeles, which relates solely to property damage. Advice has been received that US Gypsum, one of the leading property damage defendants, has now filed a Declaratory Action against all its Insurers in Cook County, Illinois.

It is important that there be a uniform approach adopted by the London Market to the coverage issue relating to the attachment of property damage. There have already been indications that Producers may assert that property damage should be allocated over all years from installation to discovery.

The Facility discussions have yet to address property damage, but every reasonable effort will be made to find a solution short of coverage litigation, which would be very expensive and time consuming.

Daily Telegraph: Lloyd's receives Howden report

The authorities at Lloyd's have received the report on the scandals involving Howden, the broking firm, from the two inspectors they appointed and are now consulting legal experts on the course of action. Peter Millett, QC, and Nigel Holland, of accountants Ernst and Whinney, have delivered a long and scathing document about the reinsurance arrangements of the syndicates run by Ian Posgate, the former leading underwriter.

They are already subject to litigation and a series of cases has been set down for hearing next year. Despite this, Lloyd's is to distribute the new report to the thousands of members of the two syndicates.

Lloyd's has been advised that sending it only to people directly involved could not give rise to libel suits. It has also been told that it would be a dereliction of duty not to share the information so expensively collected.

Mr Holland and Mr Millett were appointed just a year ago and this is the final report on their original remit. Since then Lloyd's has added extra inquiries dealing with some of the other activities around the syndicates where Alexander & Alexander of the United States which took over Howden has charged that £32 million has been misappropriated.

Roy Miles, joint Managing Director of Lloyd's insurance brokers Miles Smith Group said recently that many insurers are refusing Employers Liability insurance cover to contractors involved in asbestos related work. The Insulation Industry Insurance Scheme, launched by the Miles Smith Group, was designed with the needs of asbestos removal contractors particularly in mind. The scheme would bring a new degree of consistency to medical screening for asbestos related infections and offered reputable, established insulation contractors the opportunity to contain insurance costs provided they conformed with the requirements of The Asbestos (Licensing) Regulations which will come into force on 1 August 1984.

There is no disputing the necessity for the 1984 Health and Safety at Work Act nor for the Asbestos Regulations which have flowed from the Act.

Concern has increased over a long period of time about working with asbestos and the tightness of legislative controls reflects a number of factors such as the increasing amount of accumulated knowledge of the subject; pressure from employee representatives to improve the conditions of insulation industry workers; technological advance - availability of safety equipment; the ability of the industry to implement controls without impeding progress to the works and publicity such as the recent Yorkshire Television documentary.

The construction industry from a health and safety point of view has been far too sloppy for far too long and the latest statistics give no cause for complacency - it is clear that the Site Safe 83' Campaign has not had an immediate practical impact in reducing casualties. Only recently Mr Peter Morrison, the Junior Employment Minister, complained that the industry was sacrificing safety for the sake of shaving "a few miserable quid off the contract price".

Letter Attorneys to underwriters at interest care of CJ Ayliffe Re: Asbestos Property Damage Litigation.

You have requested advice regarding the date of loss for coverage purposes. The context of your request is that assureds have commenced litigation against you at least one object of which is to establish an asbestos property damage date of loss for insurance coverage purposes...For the reasons set forth above, we believe it is proper to assert in litigation that the date of loss under your policies is the date when the underlying claimant recognises that asbestos contained in a building presents a potential hazard to health such that the owner has an obligation to take remedial action in connection with the asbestos... It should be recognised there is no controlling decision on the subject in the United States. Until such time as a general rule emerges for this kind of property damage claim, no definitive opinion is possible.

An attorney's report stated that property damage was now evolving into a major issue.

3. Nigel Holland stated that it is important that the majority of executives with insurance work have an overall insight into the market and their knowledge and experience is more widely based.

12. Asbestosis will be equally relevant for many London Market companies as it is for Lloyd's syndicates. Nigel Holland informed the meeting that progress towards a settlement involving many of the main manufacturers in the US, was being made and that an announcement to this effect was imminent. The fact that losses may now have to be paid out sooner rather than later may have implications for those companies which have adopted discounting techniques in the past. The chairman of the Asbestosis Working Party is to address a meeting at which E&W will be represented. Nigel Holland will ensure that notes of this meeting are circulated to interested parties. Peter Standish commented that a useful publication entitled "Asbestosis Litigation Reporter" had appeared in the London Market.

Letter from RAG Jackson, Chairman of the Asbestos Working Party to Underwriters - To Non-Marine Market and Non ILU Companies, but signed by H A R Rokeby Johnson. (The letters commences "The matters discussed in this letter concern the most serious claim problem ever encountered by our industry. I cannot over emphasise that it is essential for you to give active consideration to the issues that are addressed, and more particularly, your support to the efforts that are being made to develop a more practicable way of handling the asbestos problem. ... discussions with Producers aimed at the establishment of a Claims Facility were reaching a positive conclusion. Final discussions upon the coverage issue took place in San-Francisco on 4th-5th January 1984, at which the two London Market representatives were in attendance .... agreement in principle has been concluded...

You will be aware from the Asbestos Working Party Annual Report which was recently distributed to the Market that the discussions with Producers aimed at the establishment of a Claims Facility were reaching a positive conclusion. Final discussions upon the coverage issue took place in San Francisco on 4th/5th January 1984, at which the two London Market representatives were in attendance. Subject to minor points which have yet to be ratified, agreement in principle has been concluded upon coverage issues which provides that the signatories endorse and will recommend to their respective principals the proposals. It is unlikely that the terms can be embodied into a formal agreement before April, but meantime the Asbestos Claims Council Resolution Committee has agreed to lift the confidentiality agreement to enable details to be provided to the insurance industry. However, it is important that the London Market respects the need to keep confidential the information provided in this letter in order to prevent premature leakage to the media, which could be counter-productive to the interests of all parties at this stage.

1. Coverage and Funding

Insurance coverage for an "exposure period" will be provided for a period from the first exposure to an asbestos product until manifestation of a disease ……. Approximately 1975 forward insurance coverage for asbestos diseases was either not available to a Producer or was written very protectively with high claim deductibles.

3. Central Facility

7. Non-aggregate Policies and Deductibles without a Stop-Loss:

A formula has been developed which puts a cap on payments where a non-aggregate insurance policy which attached in the period prior to knowledge of the asbestos issue has been triggered. The formula involves a multiplier of policy limits which decreases with the face amount of the policy. Where Producers have deductibles without a stop-loss, relief has been afforded under a similar theory where deductibles do not exceed $25,000 per claim or per occurrence. Deductibles or self-insured retentions in excess of that amount must be negotiated between the parties or in the event of a dispute, the parties must resort to arbitration, and if necessary, litigation. However, all punitive damages are waived. Policies written in the knowledge of the asbestos issue will be interpreted strictly in accordance with their terms.

Subscribing Insurers are now giving consideration to the Producers' request that they cover gaps created by solvent non-subscribing Insurers in the band of coverage provided that the subscription to the Facility by Insurers is heavy and there are few non-subscribers and that the Producer will pursue any non-subscribing Insurer who refuses to pay his share through litigation in Court. If such suit is successful, the Producer will reimburse Insurers who have paid money on the behalf of non-subscribing Insurers.

The items listed above are the principal issues covered in the proposed agreement. There are other issues involving interpretation of insurance policies which have also been resolved, but they are too numerous to mention and do not substantially affect the operation of the Facility.

I hope that the above summary will give you a sufficiently broad indication of the proposals to enable initial consideration of the matter. As I have stated, it is likely to be at least two months before the proposals have been put into a detailed form for presentation to all parties at interest. However, The Working Party considers that it is essential that the market be made aware of these important developments and be provided with some background to the negotiations and likely developments in the future if endorsement is forthcoming from the Insurance Market. It is therefore proposed that there be a market meeting at 10:30 a.m. on Monday 13th February 1984 at the City Conference Centre, Marine Engineers' Building, 76 Mark Lane. Due to space limitations it is requested that no more than two individuals attend from each underwriting organisation, and that they each sign the attendance form at the entrance.

For your information, you will find attached to this letter a list of the Producers who have been involved in these discussions, and the Insurer members of the Asbestos Claims Council. Those individuals who form the Resolution Committee have been separately identified.

In conclusion, I feel I must record that the Working Party has been closely associated with the initial concept of the Facility and various negotiations that have taken place over the past fifteen months. Now that an agreement is developing, you should be aware that members of the Working Party are unanimous in their support to what they consider to be the only practical solution to this difficult problem.

Lloyd's Log: New asbestos scheme by Miles Smith

Roy Miles, joint managing director of Lloyd's insurance brokers Miles Smith Group said recently that many insurers are refusing employers liability insurance cover to contractors involved in asbestos related work. The Insulation Industry Insurance Scheme, launched by the Miles Smith Group, was designed with the needs of asbestos removal contractors particularly in mind.

The scheme would bring a new degree of consistency to medical screening for asbestos related infections and offered reputable, established insulation contractors the opportunity to contain insurance costs provided they conformed with requirements of the Asbestos (Licensing) Regulations which will come into force on August 1, 1984.

Concern has increased over a long period of time about working with asbestos and the tightness of legislative control reflects a number of factors such as the increasing amount of accumulated knowledge of the subject, pressure from employee representatives to improve the conditions of insulation industry workers; technological advance - availability of safety equipment; the ability of the industry to implement controls without impeding progress to the works and publicity such as the recent Yorkshire Television documentary.

There is no disputing the necessity for the 1974 Health and Safety at Work Act nor for the Asbestos Regulations which have flowed from the Act.

The construction industry from a health and safety point of view has been far too sloppy for far too long and the latest statistics give no cause for complacency - it is clear that the Site Safe 83 campaign has not had an immediate practical impact in reducing casualties. Only recently Mr Peter Morrison, the junior employment minister, complained that the industry was sacrificing safety for the sake of shaving "a few miserable quid off the contract price".

The Committee of Lloyd's established a Committee of Enquiry, chaired by Sir Edward Singleton, to enquire into Bellew, Parry & Raven and, to establish the facts and report, inter alia, as expeditiously as possible in relation to all reinsurance business giving rise to material premiums and or claims transacted directly or indirectly by Lloyd's Syndicates managed by the BPR Group Managing Agencies with Companies directly or indirectly controlled through interrelated party interests. (In the case of PCW and Alexander Howden, the enquiry related to all reinsurances and purported reinsurances transacted by Lloyd's Syndicates through the agencies of (amongst others) PCW, WMD, Alexander Howden Underwriting Ltd. This included reinsurances and "inter syndicate reinsurances" placed by Alexander Howden Ltd,

Financial Times: Cavalier warranty insurance holders ‘not protected'

MANY of the 130,000 policyholders who insured their kitchen equipment and cars with the failed Cavalier Insurance Company will get no compensation for financial loss.

They have been left in this position by a weakness in the 1975 Policyholders' Protection Act.

The Act was intended to protect the public from the financial consequences of a collapse of an insurance company. It ensures that individual policy-holders with insurance claims against the failed company would receive at least 90 per cent of their claim.

The shortcomings of the Act emerged yesterday when details were given to the Department of Trade and Industry of the winding up of Cavalier Insurance Company. The winding up order was made the previous day.

Cavalier Insurance Company was authorised under the 1982 Insurance Companies Act only to underwrite property insurance. However, during the period 1982-83 it underwrote extended warranty insurance - insurance which covers the cost of replacing or rectifying defects in goods or motor vehicles receiving more than £1m in premiums, even though it was not authorised to do this type of business.

Mr. Colin North Smith, chairman of the Policyholders' Protection Board which administers the Act, said yesterday that legal advice given to the board was of the opinion that these extended warranty contracts were not policies under the 1975 Act as the company was not authorised for this type of business and thus not covered by the provisions of the Act.

But he confirmed that any claims outstanding from the 7,500 policyholders with property insurance policies with Cavalier would be protected by the Act.

This legal opinion is apparent]y based on a recent case concerning unauthorised insurance policies.

Policyholders with extended warranty claims cannot expect much from the normal liquidation processes. . The preliminary advice given by the Official Receiver, who has been confirmed as provisional liquidator, is that they may be entitled to claim only for premiums received by the company and that they have no rights of recovery in respect of other claims.

Indications of the complexity came in the winding-up petition read out in court. This stated that the Official Receiver had been unable to establish the identity of the shareholders nor establish the financial position of the company. Doubts were cast over the validity or enforceability of an alleged reinsurance contract with an unnamed reinsurer.

Funds intended to pay the £950,000 reinsurance premium had been misappropriated as to £800,000 by directors, former directors or persons purporting to act as directors and applied to purchase shares in the company in contravention of the 1981 Companies Act.

Financial Times: Lloyd's to investigate BPR companies

Lloyd's has appointed Sir Edward Singleton, a former president of the Law Society, to carry out a wide-ranging investigation into the group which is responsible for the affairs of 540 members of Lloyd's, and provides underwriting services for a further 450 members.

The new investigation at Lloyd's arises from an earlier inquiry launched into the affairs of Brooks & Dooley Underwriting Agency and the links that two executives of the agency had with a company in Bermuda, the Fidentia Marine Insurance Company.

Sir Edward has been asked to examine the flow of funds between 18 Lloyd's insurance syndicates under the management of the Bellew, Parry & Raven Group with companies which either are or have been under the control of Mr. Bertram Grattan-Bellew, Mr. John Parry and Mr. Frederick Charles Raven, who are directors of the agency company.

Sir Edward has been asked to look at the premiums or claims transacted in the form of reinsurance contracts directly or indirectly through the following agency companies in which Bellew, Parry & Raven have an interest.

The agency companies are Bellew & Raven (Underwriting Agencies); K F Alder (Underwriting Agencies); A R E Chambers Underwriting Agency; Coucher Underwriting Agency; Haynes & Clack Underwriting Agencies; R P Milligan (Underwriting Agencies).

Mr. Edward Nelson, a former member of Lloyd's ruling council, is a senior executive of K F Alder.

Sir Edward has been asked to examine the extent of involvement of any person or their families connected with the agency company, and with brokers which acted in the placement of business in the form of reinsurances for the syndicates.

He will look at the financial impact of any transactions on the interests of members of Lloyd's whose affairs Bellew, Parry & Raven and the agency companies are responsible. In addition, the conduct of everybody involved in the transactions is to be examined.

Bellew, Parry & Raven disclosed nearly a year ago that the group dealt with an offshore company in Bermuda, the Midland Reinsurance Company, which was controlled by trusts held for "the children of directors of Bellew, Parry & Raven".

Sunday Times: Davison wins Lloyd's in-fighting

AFTER 10 months of secrecy, Lloyd's has finally come out into the open with a full scale, wide-ranging inquiry into the affairs of Bellew, Parry & Raven, writes Tony Levene.

The new investigation - led by the lawyer, Sir Edward Singleton - represents a major victory for the chief executive of Lloyd's, Ian Davison, in his internal struggles against the more backwoods elements in Lloyd's.

One area of special interest will be Bermuda where two reinsurance companies - Bermuda Re and Midland Re - are closely linked with Bellew, Parry & Raven.

Bellew, Parry & Raven Agencies used to have a stake in Bermuda Re until it was transferred in the late 1970s to Breen Ltd, a company over whose country of registration there is some doubt. A second major shareholder is Ocean Re, an offshore reinsurer.

But also appearing on the shareholder list are members of the Pearman family. Recently, Sir James Pearman held 25,000 shares out of 230,000, R S L Pearman 25,000, and James A Pearman held 5,000. The Pearmans are connected to a Bermuda law firm, Conyers Dill & Pearman, and at the time of the Lloyd's enquiry into Brooks and Dooley refused to give evidence. The law firm had set up both Midland Re and Fidentia. Four members of the Pearman family are names on syndicates now under investigation.

In November, at the time of the Brooks & Dooley report, lawyers acting for BPR said: "Although it remains to be seen whether BPR and Conyers Dill and Pearman are the main recipients of publicity in the second Brooks & Dooley report, our clients certainly do not believe this will be the case."

Daily Telegraph: Outsider to lead Lloyd's inquiry

Accountancy Age: Investigations loom in wake of new Lloyd's probe

Sir Edward will look into the reinsurance placed by underwriting syndicates managed by six agencies and the interests of the three men in the reinsurers - particularly their links with Bermuda.

Anderson said: "It was accepted practice to send reinsurance to connected companies. The abuse arose when it didn't come back."

Since the practice was widespread, he said, further inquiries are bound to follow.

Already Lloyd's investigations hare covered Alexander Howden, Minet subsidiary PCW Underwriting Agencies and Brooks and Dooley where offshore interests in reinsurance were not disclosed.

Anderson said: "The great majority did it. They were constrained by the tax rules. The question is how many took a personal benefit."

Auditors to the six Lloyd's agency companies in the latest probe, Bellew and Raven (Underwriting Agencies), K F Alder (Underwriting Agency), A R E Chambers Underwriting Agency, Coucher Underwriting Agency, Haynes and Clack Underwriting Agencies and R P Milligan (Underwriting Agencies) were this week considering their response.

Lloyd's chief executive Ian Davison has said there are between 10 and 20 investigations under way of which four are public inquiries.

Financial Times: Neville Russell supervised BPR insurance contracts

Accountants Neville Russell, which specialises in audit work in the Lloyd's insurance market, supervised insurance contracts arranged by underwriting agents in the Bellew, Parry & Raven (BPR) group with companies in which the agency executives had interests.

The details were revealed this week at a meeting of more than 100 Lloyd's agents who have introduced underwriting members to insurance syndicates managed by the Bellew, Parry & Raven group.

The meeting was called following the announcement by Lloyd's that an official inquiry was to be launched, headed by Sir Edward Singleton, former president of the Law Society, into the affairs of Bellew, Parry & Raven.

Sir Edward Singleton has been asked to examine the flow of funds from insurance syndicates under the management of Bellew, Parry & Raven agency companies with companies in which the three founding directors of the agency have a direct or indirect interest.

Mr. Edward Nelson, an executive of the agency K F Alder, which forms part of Bellew, Parry & Raven, told the meeting that his agency and the syndicate's under its management had traded with affiliated companies.

He said that his syndicate had a rollover policy and other contracts established with affiliates and that there had been contracts arranged in the past. "all contracts were supervised by our auditors Neville Russell", he told the meeting.

Mr. Nelson, a former member of the council of Lloyd's, said: "we have made it a practice over the years that all reinsurances of a material nature are advised to our auditors annually and we seek their approval."

Policy Holder: Lloyd's man to head inquiry

Lloyd's has appointed Sir Edward Singleton, a solicitor and former president of the Law Society, to investigate six underwriting agencies belonging to the Bellew, Parry and Raven Group.

The inquiry will investigate all reinsurance business transacted by Lloyd's syndicates through these agents with companies controlled by Arthur Grattan-Bellew, John Parry, Frederick Raven, their associates or families.

Underwriting Agents requested to disclose the reinsurance arrangements they have made with offshore companies to Lloyd's. Lloyd's required the confidential returns to assist them in their discussions with the Revenue.

Widespread storm damage in Britain during January will cost around £70 million according to the British Insurance Association.

Lloyd's List: M&M acquires Canadian firm

The consulting and financial services group of Marsh & McLennan Co. Inc has acquired Hickling-Johnston Ltd in Canada for a total cash consideration of about Can $4-1 million (£2.3m).

It will be merged with the Canadian operation of William M Mercer, the leading world-wide employee benefit and compensation consulting company Marsh & McLennan said.

Lloyd's has decided not to publish Part 2 of the Coleman Report into suspended underwriters Messrs R Brooks and T Dolly and their relationship with Fidentia. Although not being made available to Names, Part 2 resulted in Lloyd's Disciplinary Proceedings, case No. 8301/4, "Pearman", being brought against J A Pearman and R S L Pearman, partners in the Bermudan law firm, Conyers Dill & Pearman, and members of Lloyd's via BPR; and case No. 8502/3, "Fidentia", being brought against B C Peers, Miss M M Brooks, J R Parry, F C Raven and Bellew, Parry & Raven Ltd.

Financial Times: Disclosure of reinsurance details requested

Underwriting Agents in the Lloyd's insurance market have been asked to disclose the reinsurance arrangements they have made with offshore companies. The Request, at a meeting of agents yesterday, was made by Mr. Peter Miller, Lloyd's chairman, following a wave of scandals in the market.

Lloyd's is under pressure from the Inland Revenue, which is trying to trace millions of pounds not declared for tax purposes by the market's professionals.

Under the guise of reinsurance contracts, money has been channelled out of the market by the professionals to companies based in tax havens which are controlled by the working members of the Lloyd's market and their families.

More than $400m (£282m) is believed to have been channelled to Bermuda and Lloyd's is to examine which are legitimate and which are bogus reinsurances.

Underwriting agents will have to complete forms which show their reinsurance arrangements, which they have always claimed are designed to protect underwriting members of the market against onerous losses.

The disclosure arrangements are part of a deal reached with the Revenue by Mr. Ian Hay Davison, Lloyd's chief executive, a year ago. Following the scandals surrounding Alexander Howden and Minet Holdings where $55m and $53m were alleged to have been channelled out of the groups' Lloyd's interests to companies controlled offshore by former executives the Revenue wanted to seize Lloyd's files.

The disclosure proposals form part of the agreement with the Revenue which has set up a special office in Mincing Lane near Lloyd's to investigate the market's affairs.

Sunday Times: Lloyd's private report

Lloyd's has decided not to publish the second part of the report into suspended underwriters Raymond Brooks and Terence Dooley and their relationship with Fidentia, the offshore reinsurance company they controlled.

It has decided that this part of the report is of no direct concern to names because it will apparently contain nothing which could be actionable.

The first part was critical of the way Brooks and Dooley used the offshore services of Bellew Parry and Raven, among others, to move premium cash to Bermuda.

But the recently announced Lloyd's inquiry into BPR will go far beyond Brooks and Dooley. In all, premium income well in excess of $250m is involved.

We have been asked to make it clear that Ocean Reinsurance Corporation SA of Liechtenstein had no shareholding in, nor any other connection with the Ocean Re mention in last week's article.

A Market Meeting took place on the subject of asbestosis at 10.30 a.m. at the City Conference Centre, Marine Engineers' Building, 76 Mark Lane. This was under the auspice of the Lloyd's Underwriters' Non-Marine Association, H R Rokeby-Johnson 1984 Chairman. R A G Jackson, the 1984 appointed Chairman of the asbestos Working Party, is understood to have addressed the meeting. The Working Party considered that it is essential that the market be made aware of the important developments concerning the setting up of a Central Claims Facility and be provided with some background to the negotiations and likely developments in the future if endorsement is forthcoming from the Insurance Market. Due to space limitations it is requested that no more than two individuals attend from each underwriting organisation.

The 1983 Annual Reports of Syndicates Byelaw (No. 2 of 1984, 13 February 1984). The Council shall set up a central file of annual reports of syndicates, which shall contain a separate section in respect of each syndicate. The Managing Agent shall send to the Society, not later than 15 June 1984, two copies of every annual report prepared, but excluding the individual personal account prepared for each individual Member. On copy of every annual report received by the Society shall be placed on the Central file. Every Managing Agent which managed a syndicate at 31 December 1983 shall produce in respect of such syndicate an annual report signed by at least one director or partner as the case may be, of the underwriting agent and the active underwriter of the syndicate (or separate reports by each of them) on the business transacted for the account of the underwriting members who underwrote through that syndicate during any relevant year of account and other matters of specific interest including comments on the progress of open years. The annual report shall comprise any additional commentary which the Managing Agent considers appropriate. The "relevant year of account" in relation to a syndicate, the 1983 year of account or any earlier year of account other than a year of account in respect of which all outstanding liabilities of underwriting members arising out of insurance business underwritten through that syndicate were, with effect from a date no later than 31 December 1982, wholly reinsured at Lloyd's. The Interpretation Act 1978 shall extend to and be applicable to this byelaw, which shall be deemed to be subordinate legislation within the meaning of this Act. The Council or the Committee may on application extend as it may think fit any time limit specified in this byelaw. (This Byelaw relates to the 1981 year of account closed in mid 1984 as at 31 December 1983). Under paragraph 5.28, the Neill Report states "we have already mentioned the existence of published comparisons of syndicate results made possible by the decision of the Council of Lloyd's to establish a central register of accounts. Although the Fisher Report pointed in this direction, the non-Lloyd's members of the Fisher Working Party were persuaded by their Lloyd's colleagues not to press any formal recommendation on the subject (Fisher Report paragraph 9.13) (The Lloyd's Members of the Fisher Working Party; Mr T B Langton, an Underwriting Agent and Lloyd's Committee Member 1973 - 76, Mr Norman R Frizzell, a Lloyd's Broker and Chairman of the Frizzell Group, Mr A B Gray, a Non-Marine Underwriter and Lloyd's Committee Member 1976 - 79, Deputy Chairman 1977/8, were on "Baby Syndicates"). Nevertheless, this reform was implemented early in the life of the new constitution by means of the 1983 Annual Reports of Syndicates Byelaw (No. 2 of 1984) which was later extended in operation by the Syndicate Accounting Byelaw (No. 7 of 1984)".

Financial Times: Lloyd's considers reinsurance curbs

The ruling authorities of the Lloyd's insurance market are considering whether the market's professionals should be prevented from arranging deals for insurance syndicates under their management with offshore companies which they control.

Lloyd's has received a recommendation from investigators who probed the relationship of two of the market's professionals with the Fidentia Marine Insurance Company in Bermuda, which they controlled, that there should be "a comprehensive prohibition on all future related party reinsurance transactions."

The investigators said in an internal report that control by syndicate underwriters over reinsurance companies "will almost give rise to abuses of the underwriter's fiduciary duty to his syndicate" which he runs at Lloyd's.

Mr. Ian Hay Davison, Lloyd's chief executive, said yesterday that the recommendation was under consideration. But he warned: "It is all very well for the inspectors to say what the market should do. It is another matter to consider what is possible."

Mr. Davison confirmed that the Inland Revenue was interested in the operation of roll-over reinsurance schemes which are often arranged offshore by the market's professionals for underwriting members in offshore tax havens.

The device is designed to reduce taxable disclosable profits in the UK and the contracts usually contain an agreement that the money should be returned to the syndicate at a later date. The Inland Revenue is attempting to crack down on the operation of blatant tax avoidance devices.

In a further wave of reforms Lloyd's is to make mandatory the filing of audited annual reports of its syndicates to a central filing system, which will be available to the public. A bye-law giving force to the measure has been passed and reports will have to be filed by June 15 this year

Lloyd's said it had no plan to ask for information from underwriting professionals for the period before the end of the last underwriting account at the end or December 1983. Mr. Davison said: "We do not design rules with the assumption that everyone is up to no good."

• Mr. Joe Hodges, secretary general of the Corporation of Lloyd's, once the top administrative post in the market, has resigned after 34 years service.

Mr. Hodges, 52, was said by Mr. Davison to feel that his job had changed since Mr. Davison had taken over as chief executive. Mr. Michael Parry is to succeed him in a new post - secretary to the Council of Lloyd's. The title of secretary general has been dropped.

The Times: Disclosure order to syndicates

The new system is the latest move by the Lloyd's regulatory authorities to improve the standards of accountability and disclosure in the wake of the recent scandals.

Mr. Ian Davison, chief executive of the market, said that copies of audited annual reports must be deposited with Lloyd's ready for filing by June 15.

Early in July the reports, which will relate to the three years accounts 1981, 1982 and 1983, will he available for inspection in much the same way as public company accounts are made available at Companies House. A small fee will be charged for inspection.

Mr. Davison said that in April another by-law will be enacted to include mandatory disclosure of related party Interests and transactions. A thorough review of audit requirements is also in hand.

Underwriters will also have to produce a descriptive report of the business which would be similar to the chairman's statement in a public company's annual report.

Mr. Davison promised that Lloyd's will investigate any irregularities which come to light as a result of the increased disclosure requirements. This would include passing on details of any gross tax irregularities to the Inland Revenue.

Lloyd's also announced yesterday that Mr. Joe Hodges, secretary general of the corporation, has resigned after 34 years at Lloyd's. A new position of secretary to the Council of Lloyd's has been created and will be filled by Mr. Michael Parry, head of personnel at Lloyd's.

Financial Times: Minet fails to trace $17m lost in underwriting scandal

More than $17m (£11.78m) belonging to over 1,000 Lloyd's underwriting members who form insurance syndicates under the management of Minet Holdings, one of Britain's largest insurance brokers, is still missing.

In the scandal which erupted at the end of 1982 it was feared that $40m had been misappropriated. It later appeared in court proceedings designed to recover the money that $53m was missing. But the final amount which has been diverted out of the Minet insurance syndicates is feared to exceed $57m.

Minet has tracked down $40m of assets in Gibraltar and has yet to recover the rest of the money for the insurance syndicates.

Attempts to account for the full amount have so far failed although investigations are being carried out world-wide by the company to trace the money. It is alleged that the money has been misappropriated by former Minet executives.

The City of London Police Fraud Squad, which started an investigation in November 1982, is still investigating the matter along with Department of Trade and Industry.

Lloyd's which has carried out an investigation, is studying a confidential report into the matter prepared by Mr. Simon Tuckey, QC and Mr. Nigel Holland, an accountant, with Ernst and Whinney. The report is being studied by the Lloyd's regulatory committee and bodies.

The report details how money was channelled out of the syndicates under the guise of reinsurance to tax havens. The money was channelled to the Isle of Man, Guernsey, Bermuda, Gibraltar, Liechtenstein, Panama and Switzerland.

The investigators have been told how at least $57m was paid out of money belonging to the syndicates for so-called reinsurances. But the amount of money received in Gibraltar only totals $40m under the reinsurance contracts.

Lloyd's investigators have detailed in their report how the money was fed from the syndicates to a number of anstalts (financial trusts) in Liechtenstein which were formed with code names by the former Minet executives. The code names mentioned are Perix, Optix, Manix, and Papix.

The Papix anstalt was created for the benefit of Mr. John Wallrock, the former chairman of Minet Holdings, who resigned in November, 1982 after admitting that he had secretly received benefit from reinsurances arranged for the group's Lloyd's insurance syndicate.

Mr. Peter Cameron-Webb, who ran the Minet underwriting agency, PCW. which looks after the affairs of the syndicate and who is seeking to start insurance work in the Insurance Exchange of the Americas in Florida, also received benefits through a settlement with the code name Alix, which was later known as Maderna.

Mr. Peter Dixon, who ran the underwriting agency when Mr. Cameron-Webb resigned at the end of 19.81, received benefit via a settlement called Cafix, which was later known as Rosalinda.

At present Lloyd's has no plans to publish the report which is under study. The ruling authorities have yet to decide whether they will take disciplinary action.

Financial Times: Sedgwick names two in case of lost funds at Lloyd's

A former main board director of the Sedgwick Group, Britain's largest insurance broker, and a former employee received secret payments from an underwriter, who is alleged to have misappropriated at least $57m (£40m) from more than 1,000 Lloyd's underwriting members.

The two men were named by Sedgwick as Mr. Michael R. Adams, a director of the group who retired in June 1982, and Mr. Geoffrey F. Naude, a broker at Sedgwick who resigned on Wednesday.

The two men received payments from an offshore settlement called Cafix, which was set up to receive money secretly from Lloyd's insurance syndicates under the management of companies controlled by Minet Holdings, another large insurance broker.

Cafix, and a range of settlements, were set up to benefit privately Mr. Peter Cameron-Webb, Mr. Peter Dixon and other former executives of Minet, including the former group chairman, Mr. John Wallrock. The Department of Trade and Industry, the City of London Police Fraud Squad, investigators in the Lloyd's insurance market, and the present management of Minet Holdings have been attempting to trace where the amount of at least $57m had gone.

So far $40m has been located in Gibraltar. Other cash has found its way to Liechtenstein trusts.

Mr. Adams and Mr. Naude received $62500 as beneficiaries of Cafix sub-account number 7957. In a statement yesterday, Sedgwick, without specifying the amount of money the two had received, said that they had received payments "at a time when they were employees of the Sedgwick Group from Mr. Peter Cameron-Webb or a company controlled by him."

Sedgwick added that the "payments were made to the individuals concerned in their personal capacity without the knowledge of or any impropriety on the part of Sedgwick Group."

Sedgwick has said that it has sought and received assurances from all directors of the group, as well as all executive directors of all subsidiaries world-wide "that they were not party to any such improper arrangements" involving reinsurance schemes.

Financial Weekly: More Lloyd's suspense?

ONE WONDERS whether suspended underwriters of. Lloyd's - currently sunning themselves in the- Caribbean and the Mediterranean - get-the time to read Lloyd's Log - Lime Street's monthly bible.

If they do, they will probably spill their rum punches and Martinis and seek the shade of some nearby palm tree because the February issue of The Log makes no bones of the fact that Lloyd's chief Ian Hay Davison is intent upon bringing the culprits to book.

In a major feature article entitled "The Quiet Revolution", the chief executive, tells Lloyd's members that "the miscreants- are being tracked down."

Reports on various investigations are now available to Lloyd's and "disciplinary charges are being formulated and brought forward," he says.

"From the middle of this year the accounts of all syndicates at Lloyd's are to be available on public file" says the Lloyd's chief. Furthermore, these accounts will contain information about the related party interests - of underwriters and others involved in the management of syndicates. Dubious practices will fade away like mists before sunshine" says Hay Davison.

Fine thoughts indeed, but where large sums of money are involved, greed usually surfaces before honour. The Act of Parliament granting the Lloyd's insurance market wide self-regulatory powers would not have been passed into law if the scandals which surfaced had conic to light earlier.

Mail on Sunday: Lloyd's to face a blitz from taxman

Top-level discussions have recently. taken place at the Inland Revenue to decide whether to launch a tax-collecting blitz on the artful reinsurers of lime Street, some of whom may have tucked the money away into their own offshore pockets,

But a flush of multi-million scandals affecting such major Lloyd's brokers (agents) as Alexander Howden and Minet Holdings highlighted a :new twist. Here much of the reinsurance money went to companies secretly owned by individual brokers and underwriters.

Latest disclosures involve the Minet-owned underwriting agency POW, which under Peter Cameron Webb - a former colleague of Lloyd's ex-chairman Sir Peter Green - is alleged to have siphoned off $57 million (£40 million) of which $1.1 million still untraced.

Several private Liechtenstein trusts had been set up act as money-boxes for Minet chairman John Wallrock (his is called Papix), Cameron Webb (Alix) and colleague Peter Dixon (Cafix). And these offshore benefits ex tended beyond the in-house group.

PCW also handled special reinsurance for Alexander Howden, whose chairman Ken Grob left with three co-directors after its lucrative in-house arrangements were revealed. Now Sedgwick Group has admitted that Michael Adams and Geoffrey Naude shared in Cafix.

Inland Revenue investigations may concentrate on what are known in Lloyd's as ‘roll-overs', where money can be sent overseas in fat years and brought back in leaner insurance seasons. They can be legit if the reinsurer takes a risk.

Financial Times: Lloyd's tries again to improve image with Inland Revenue

Ten days ago, Lloyd's underwriting agents were summoned at short notice by Mr. Peter Miller, chairman of their insurance market, to a meeting to discuss their reinsurance arrangements.

The move marked another stage in Lloyd's attempts to improve accounting and disclosure in the market after a wave of scandals. But the latest proposals for .disclosure are more than usually significant for they could affect Lloyd's standing and relationship with the Inland Revenue - a relationship which has become extremely tense in the past year or so.

While Lloyd's is faced with the problem of tracing funds running into millions of pounds which have been allegedly misappropriated by the market's professionals from money belonging to the underwriting members, the Inland Revenue is faced with the equally daunting problem of recovering funds which have not been declared for tax.

The Inland Revenues concern about the recent irregularities in the Lloyd's insurance market centre on two main issues: the use of reinsurance as a tax evasion device for all members of Lloyd's; and the use of reinsurance as a tax. evasion device for the market's professionals.

The tax authorities are alarmed at the degree of tax evasion which has taken place at Lloyd's. Lloyd's already enjoys considerable, and recognised, tax advantages from the Inland Revenue in order to attract new capital, in the form of the underwriting members, to the market, and ensure its continued growth

So the Revenue is exerting considerable pressure on Lloyd's to give a full account on how schemes which have had a tax evasion purpose have been structured at Lloyd's.

To this end, Lloyd's, at the meeting of underwriting agents, had asked the professionals to give full details of how a tax scheme devised by the market has operated. The scheme is known as "rollover" reinsurance.

Reinsurance is an important .!insurance mechanism, which allows professional insurers to lay off large parts of their risks with other companies and protects them against onerous losses. Rollover reinsurance, widely used in Lloyd's, is a different device and operates as follows.

Once the Lloyd's professionals have arranged the usual reinsurance protection for the syndicates under their management for real underlying risks, they usually assess the disclosable profitability of the syndicate. If the disclosable and taxable profits of the syndicate are likely to a big jump, another reinsurance contract is arranged.

The extra contract, which carries little likelihood of a claim ever being made against it; is paid for by a premium out of the syndicate. The reinsurance premium is deductible for tax purposes and the contract usually contains a contractual arrangement that the reinsurer refunds the premium in the event of no claim, which is most likely, or the balance of the premium in the event of a claim.

The reinsurer may enter into a reverse contract with the syndicate, so that money eventually flows back to the syndicate, which then acts as a reinsurer to the group with which it placed its reinsurance business.

At, the same time, the Revenue is also attempting to identify where that type of reinsurance business has been placed.

Recent investigations in Lloyd's have disclosed that rollover funds are often lodged with companies where the market professionals have a direct shareholding interest.

The companies are usually based in tax havens, and the professionals have drawn money from the funds which they have lodged offshore for their personal benefit.

The Revenue is attempting to establish the amount of tax that the market's professionals have evaded through the use of those related companies. Lloyd's is insisting that all related party transactions are disclosed in the future.

Mr. Ian Hay Davison, Lloyd's chief executive, said that if "gross tax irregularities"' were disclosed in the market's official investigations into individual firms, the findings would be reported to the Inland Revenue.

Daily Telegraph: Mounting losses in insurance

THE major composite insurance companies are likely to report mounting underwriting losses for 1983 and 1984 contrary to the recent optimistic view of improving prospects, says John Ginarlis of stockbroker Quilter Godison in his latest assessment of the industry.

Commercial Union, which starts the insurance "season" of results later this month, has been "dogged by severe market conditions," and continued bad weather claims in the United States and Britain.

Financial Times:

Mr. Patrick Sheehy and Mr. Brian Garraway have been appointed to the boards of Eagle Star Holdings and Eagle Star Insurance Co. Mr. Sheehy is chairman and Mr. Garraway is a deputy chairman of BAT Industries.

Accountancy Age: Top names feature in Lloyd's reinsurance probe

Lloyd's of London latest probe into reinsurance arranged by the Bellew Parry & Raven Group for underwriting syndicates run by six agencies is to question the accountants involved and other members of Lloyd's.

Five firms of accountants on the Lloyd's panel who audit and in some cases keep the books for the syndicates will be questioned if this inquiry follows the same pattern as the one into Brooks & Dooley Underwriting and its Fidentia offshoot, Fidentia Marine Reinsurance.

Accountancy Age has obtained a copy of the earlier report which reveals that Neville Russell senior partner Alan Dyer was involved in the setting up of Bermudan-based Fidentia.

Coleridge said "It was not desperately successful. It wrote personal accident, some stop loss on other syndicates and a bit of kidnap and ransom".

Lloyd's List: New date for Beirut war risk surcharge

Members of the Far East to Europe Freight Conferences have confirmed that they will introduce a war risk surcharge of 10% on cargo loaded for direct discharge at Beirut from Feb 28.

The charge was first announced at the beginning of the month to take effect on Feb 6 but a day later the conference issued a postponement notice.

Brokers in the London market yesterday said 2-5% to 3% hull war rates for Beirut had about doubled in the last week and were now about, but there was little evidence of any business.

Some underwriters have covered the vessels doing evacuations from Beirut at rates around 2%. Lloyd's Shipping Information has no record of any losses from Beirut this year.

However, three vessels badly damaged in the northern part of the Gulf earlier this month look like producing substantial claims on Lloyd's and London market underwriters.

Despite increased fighting over the last ten days, hull rates for journeys to the Gulf appear to have remained stable. Last year 14 vessels were lost or damaged in the northern part of the Gulf, according to Lloyd's Shipping Information.

An emergency temporary standard, which was issued in November 1983, was struck down as invalid by the United States Court of Appeals for the Fifth Circuit in March 1984.

Financial Times: Lloyd's and the Revenue dispute tax liabilities

ONE OF the biggest battles between tax authorities and an institution is in progress as Lloyd's of London and the Inland Revenue try to agree millions of pounds of disputed tax liabilities in the Lloyd's insurance market.

Central to the row is the Revenue's insistence that money lodged offshore in tax havens in the form of rollover funds by the market's professionals should be declared for tax

The Revenue is trying to identify precisely how much money has been used in the form of reinsurance arrangements for tax evasion purposes.

Its concern arises from recent irregularities in the Lloyd's market involving misappropriation of more than $100m (£68.4m) by the market's professionals from money belonging to underwriting members.

The Revenue's concern at these irregularities focuses on two issues. These are the use of reinsurance as a tax evasion device for all members of Lloyd's and for the market's professionals.

Lloyd's has formed a top-level committee headed by Mr Peter Miller, the market's chairman, to deal with discussions with the Revenue. The latest arguments focus on:

• The Revenue's request for an immediate interim payment from the market to meet the tax liabilities;
• How such an interim payment should be funded
• Other ways the liabilities call be mitigated.

Lloyd's underwriting agents previously said they had problems justifying to the Revenue, if challenged, that normal reserves for unreported insurance losses were proper reserves and not tax avoidance or evasion schemes.

The establishment of large reserves can cut the disclosable amount of taxable profit, which reduces the tax liabilities of underwriting members. Funds from reserves can be released in bad underwriting years, to boost profits.

In this way the tax liability and the returns to underwriting can be smoothed between one underwriting account and the next.

Huge funds have been built up offshore in tax havens because of the Revenue's sceptical attitude to the agents' reserving policy. The agents say these have been established as extra reserves.

In what are known as rollover policies a reinsurance contract is taken out by a Lloyd's insurance syndicate. A tax deductible reinsurance premium is paid by the syndicate and the money lodged offshore with a company in a tax haven.

The premiums and investment earnings are rolled over between one underwriting account and the next in the offshore company and are returned to the syndicate only under a contractual arrangement if the syndicate's profitability looks like falling.

Over the years these funds have become used increasingly to warehouse the syndicate's surplus funds which might otherwise be liable for UK tax.

At the same time, the funds have often been lodged with companies where the market's professionals have a direct shareholding interest and have taken dividend out of the offshore tax haven company.

Now the Revenue wants these arrangements fully declared. It intends to conduct an examination of the market's books to assess whether there has been a legitimate reinsurance purpose behind the rollover contracts or they are sham contracts arranged to warehouse funds.

Lloyd's is anxious to avoid a direct tax liability and penalties. It argues with the Revenue that the offshore funds should be brought back and applied to underwriters' general onshore reserves and the reinsurance to close items of the market.

Lloyd's says huge losses will necessitate a large "reinsurance to close" item this year which could be offset by the funds lodged offshore.

The Revenue, however, is adopting a tough line because Lloyd's is one of the most profitable insurance markets in the world and past catastrophe claims, such as the recent computer-leasing losses, the current asbestosis claims and other large claims, have had little impact.

Lloyd's also faces problems with its market members over funding of any interim payment by the Revenue. The Lloyd's authorities are considering making any pavement from the central fund of last resort. This fund is designed to protect policyholders and is funded by members' subscriptions.

Members say any payment on tax liabilities should be paid for by those liable rather than spread across guilty and innocent alike.

Meeting of Ernst & Whinney. The main topic of the evening, latent diseases with particular references to asbestosis. (Ernst & Whinney's notes recorded that the number of claims is difficult to determine but may be in the region of 25,000. New claims are still coming in at roughly 500 per month and the peak may not occur until 1990). 7.

Michael Bolger introduced the subject of asbestosis, which is one of the diseases that can arise as a result of exposure to asbestos dust, and has given rise to significant claims under Workers' Compensation and Products Liability Policies (and even under property damage policies where asbestos products have to be physically removed). The problems this presents to the insurance industry are: (a) the question of what triggers the coverage - exposure manifestation or some combination of the two. (b) The length of the latency period (17-18 years). (c) The identification of the relevant insurance policy or carrier. (d) The attitude of the U.S. Courts since the Supreme Court has not set a national standard.

9. The number of claims is difficult to determine because of double counting, but maybe in the region of 25,000. New claims are still coming in at roughly 500 per month and the peak may not occur until 1990. T he main primary insurers are...... but Lloyd's underwriters are heavily involved in excess lines.

10. A syndicate needs to establish reserves as best it can. To do this it will need to have a proper understanding of policy wordings, and in particular of any aggregate limits written into the policy. Where reinsurance protection is available, careful consideration will need to be given to the adequacy of the security, and an appropriate IBNR estimate will need to be arrived at. Legal costs are soaring, and represent a very significant reserving factor, although the clarification of coverage and the establishment of the claims handling service in the USA should help by reducing litigation.

11. Ernst & Whinney have sent out a questionnaire to clients designed to elicit information as to the sources checked, the records established, the number of losses notified, reserved and settled, reinsurance writings and recoveries and the basis of the IBNR.

12. Steve Abbott stressed the need for our thought processes to be properly documented on file ..... There is no specific guidance from Lloyd's this year though there was an instruction for the 1981 solvency test that the liabilities should not be discounted. It is generally accepted at Lloyd's that the higher of the amounts arrived at on the exposure or manifestation bases should be provided together with legal costs. Reserves must be assessed gross and have reinsurance recoveries deducted.

13. In answer to a question Steve Abbott commented that he was not aware of any syndicate that had kept its accounts open because of asbestosis, although some have done so for computer leasing (which is now basically sealed). There may be a need to summon PSP meetings for particular clients during the present audit season.

Daily Telegraph: Lloyd's wins on Brooks Dooley

"Disciplinary proceedings at Lloyd's will proceed without delay " against Raymond Brooks and Terence Dooley, following yesterday's go ahead in the High Court. Lloyd's had asked the court to approve using the new procedures to expel members who had broken rules before the Lloyd's Act 1982 came into force.

Mr Justice Neill said he saw no inclination "to suggest that the specified grounds upon which disciplinary proceedings may be instituted have to exclude past events," so Lloyd's is entitled to use the simpler new method.

The victory for Lloyd's enables it to expel the two men who were the subject of a scathing report by its investigators. Their report said there had been "substantial misconduct" by the two men who had "abused their fiduciary duty " and concealed information.

Lloyd's was also awarded costs, and having won its first; such case will be fee to expel former star underwriter Ian Posgate. The new procedure allows for expulsion by the council, while the old system called for a public meeting.

Lloyd's List: Scottish Equit in Lloyd's deposit scheme

Scottish Equitable Life Assurance has launched a new scheme to help Lloyd's underwriters meet higher deposit requirements.

Under the scheme, Barclays Bank will give a guarantee to Scottish Equitable allowing the assurance group to give Lloyd's a guarantee for the full amount need to satisfy Lloyd's requirements, increased under a 1981 ruling

Barclays will in turn require the underwriter involved to assign property, shares or other assets as security for the guarantee given by Scottish Equitable.

Under the 1981 rule change, deposits were increased steeply

The requirement for an underwriting limit of £100,000, for example, was increased from £15,000 to £25,000. For a £200,000 limit the deposit was doubled to £50,000.

Daily Telegraph: Libel of insurers denied

Two Lloyd's underwriters claimed libel damages against THE DAILY TELEGRAPH in the High Court yesterday over a City page report which, they say, implied that they there awaiting trial on criminal charges

Senior underwriter Mr FREDERICK SASSE, of Camden House Terrace, Kensington, and his deputy, Mr THOMAS TURNBULL, of Stoke Hammond, Milton Keynes, Bucks, were both directors of Sasse Turnbull & Co., managing agents at Lloyd's until 1978.

Their claim arises from a report on Sept. 30 1981 under the heading: "Underwriters suspended in Lloyd's purge."

Mr Patrick MILMO for Mr Sasse and Mr Turnbull, told Mr Justice Hirst and a jury that the allegations were quite untrue and amounted to a serious libel on them both.

"There can be no worse stain on a person's character than a charge that he has committed a crime."

He said THE DAILY TELEGRAPH was a "quality newspaper with a very large circulation," and widely read by people working in the City where the pair were based.

The firm, set up 1965, had been managing the affairs of Lloyd's Syndicate 762 which crashed and was suspended by Lloyd's along with their own firm in 1977.

The crash followed the underwriting, on behalf of the syndicate by a broker in

Florida, of a large number of policies insuring " slum and derelict properties in New York and Philadelphia," he said.

But, despite a two-year police investigation, the two men had never been accused of any criminal offence and police had concluded that no fraud had been committed in Britain.

In fact, the Lloyd's disciplinary proceedings had been suspended pending civil High Court proceedings in which the directors of Sasse Turnbull sought damages against Lloyd's

The company founded Syndicate 762 which became "market leader ‘ in providing "product liability" cover for products including pharmaceuticals

The American insurance was underwritten by Mr Dennis Harrison, an Englishman, and former Lloyd's member based in Florida. They took on a lot of slum business in New York which turned out to be Mafia-controlled.

The case is expected to last two days.

Lloyd's List: Australia may limit credit to insurance broking sector

Proposed new Australian insurance legislation will limit the amount of credit companies allow brokers and will also impose annual reporting requirements. Insurance companies will also be liable for policies written by agents and brokers.

Recently appointed Insurance Commissioner Mr Warren Tickle said in Melbourne that the government also intended that the broking industry should fund administration of the legislation, likely to be A$500,000 (£318 000) in the first year.

Some 1,000 brokers would be registered under the legislation but it was suggested that as many as 10,000 would seek registration.

Under the proposals, brokers will be required to pay to insurance companies premiums collected on policies they write, within 30 days of them being signed by the consumer.

At present, they keep the premiums for some time, using the funds for income earnings investments, leaving the responsibility to fall on the consumer.

Mr Tickle said he believed the 30-day rule would lead to a transfer of profitability from brokers to insurance companies in the short term. It could also lead to some smaller brokers going out of business.

Financial Times: Overseas earnings by City up 23%

OVERSEAS EARNINGS by the City rose sharply last year. Financial services earned £2.6bn, up by 23 per cent from the 1982 figure.

The improvement, shown in the official balance of payments figures for 1983, out yesterday, reflects a better year for the insurance industry, particularly Lloyd's.

However, after allowing for a deficit on the government sector, the overall surplus on services was cut to £4 4bn.

The overall deficit on shipping rose from £340m in 1982 to £800m last y ear, but the surplus on civil aviation rose 9 per cent to £430m.

The figures show the current account surplus on the balance of payments for last year was £2bn, substantially more than was generally expected last autumn.

However, total overseas investment into Britain almost doubled from £3-6bn in 1982 to £ 6-4bn last year. The largest increase was in direct inward investment which rose £1-2bn to £1-6bn last year. However, there was also a very large rise in inward portfolio investment from £130m in 1982 to £930m last year.

The steady build-up of British institutions' portfolios of overseas investments since North Sea oil came on stream is reflected in a steady rise in dividends and interest payments.

Financial Times: Revenue seeks £30m from Lloyd's underwriters

THE INLAND Revenue is trying to recover £30m in evaded tax liabilities from Lloyd's insurance underwriters. Top-level discussions are taking place between the Lloyd's authorities and the market in an effort to establish a way in which the Inland Revenue's demands can be met.

Through bogus reinsurance arrangements, money has been channelled out of Lloyd's insurance syndicates, under the management of the professionals, to offshore companies based in tax havens. The companies have often been owned or controlled by the professionals who have arranged the contracts.

Reinsurance . is usually designed to protect insurance syndicates against onerous losses. But over the past 15 years or so underwriters have been using reinsurance to evade tax liabilities.

In the tax evasion schemes set up - which are known as "rollover policies" - money is taken out of the Lloyd's syndicates as a reinsurance premium and lodged with the offshore company. In this way the disclosable taxable profits of insurance syndicates are reduced in any one underwriting account.

A contractual arrangement is entered into with the offshore company for the return of the premium at a later date and the reinsurance contract is arranged in such a way that it never experiences any insurance losses.

Offshore funds, not liable for tax in the country in which they are built up, have been amassed by the market's professionals as the contracts are rolled over between one underwriting account and the next.

The Revenue is trying to crack down on blatant tax evasion devices in use at Lloyd's and has reached a compromise with the market for the return of £30m in liabilities so far not paid.

In Lloyd's there is much concern about how the tax payments should be met.

WIR: JUDGMENT UPHOLDS LLOYD'S DISCIPLINARY POWERS

In his judgment given in the High Court in London on 6 March, Justice Neill found that the Society of Lloyd's are entitled to bring disciplinary proceedings in accordance with the byelaws in respect of the acts or defaults done or committed before January 1983. Lloyd's can thus go ahead with disciplinary proceedings against underwriters Raymond Brooks and Terence Dooley, who had challenged in court Lloyd's right to take what they claimed would be retrospective disciplinary action. Justice Neill granted leave to appeal.

Lloyd's had asked the court to hold that the 1982 Act, and bye-laws made under its, empowered it to take disciplinary action over offences committed before 5 January 1983, when the new disciplinary process was set up in accordance with the 1982 Lloyd's Act. The new system differs substantially from previous ones in the scope and manner of investigation and the possible range of penalties.

Mr Brooks and Mr Dooley argued that the 5 January was a cut-off date and that Lloyd's had no right to take action over offences occurring before that date. They argued that the 1982 Act was not retrospective and that it in effect granted an amnesty in respect of misconduct. No charges against Mr Brooks or Mr Dooley had been laid by Lloyd's before the so called cut-off date. Mr Brooks and Mr Dooley denied misconduct and argued that the report on their activities had identified no criminal offence. They claimed that there had at no stage been any Lloyd's regulation or requirement prohibiting active underwriters from controlling insurance companies or affecting reinsurance of their syndicates with such companies. After a complaint by Mr Brooks and Mr Dooley, Lloyd's had revoked a bye law enabling its powers to be used retrospectively and passed a fresh one in December 1983 which allowed retrospection but provided that pre January 5 1983 offences should be judged and penalised under the pre-1982 Act laws.

The case sets the precedent for actions to be taken concerning the Alexander Howden Group and others at present under investigation. The first part of the Howden report has been with Lloyd's since November, but action had been suspended until the Brooks & Dooley problem was resolved.

WIR: MEMBERS OF SYNDICATE 895 DISCUSS LEGAL ACTION

Members of Lloyd's syndicate 895 are considering taking legal action against Spicer & White Underwriting Agency Ltd, the syndicate's managing agents for losses of over £13m (US$18. 8m) which fell on the names in the 1980 - 82 underwriting years. Spicer & White is a majority owned subsidiary of Willis Faber plc. A review of the case by solicitors Clifford Turner apparently confirmed that this was the most appropriate action syndicate members could take. The Association of Lloyd's Members has arranged a meeting on 19 March for members of 895 to discuss the planned legal action. A preliminary legal opinion already circulated to the Names then on 895 reportedly suggested that the losses resulted from bad underwriting judgement, overwriting the Lloyd's premium limit for the syndicate and inadequate outward reinsurance protections. Names have already been warned that their accounts for 1980 - 82, failing any alternative action to recover, will reflect a one-for-one loss situation; i.e. they will each have to find £20,000 for every £20,000 of business written for them.

Daily Telegraph: Lloyd's warns ‘pay up'

MEMBERS of Lloyd's crashed Syndicate 895 who refuse to pay up for their share of losses may have their deposits sequestered. A confidential report to members of the syndicate says that of the £4,359,800 called for at the end of Novembers only £3,959,043 has been received.

Some members are in demonstrable financial hardship and are being helped out by their agents. But a few of the 13 members not yet paying are just being reluctant to pay and action may be taken against them via the Lloyd's authorities.

"Not only do we owe it to the Lloyd's market and, of course, to the policy holders to maintain the integrity of the market, but we also have it in mind that other members hare promptly and properly discharged their obligations," says the report.

Nearly £8.5 million has been collected, leaving £4.25 million outstanding. Solicitors have been consulted about these, but it looks likely that members may be asked for another £15,000 per £10,000 underwritten.

letter from Ropes & Gray to CJ Ayliffe Re: toxic waste sites: (referred to the New York Times report on toxic waste sites. The Office of Technology Assessment has found 10,000 sites that qualify for priority action, and it estimates that the cost of clean-up may reach $100 billion. That office observes that the EPA has only 528 sites on its priority list and has given "remedial clean-up attention" to only 30% of them. The EPA disputes those figures, saying there are 800 sites on its current priority list with another 1,200 likely to be added. The general accounting office is preparing its own report on the toxic waste programme that will be issued shortly. One official in the office estimates that there are potentially some 378,000 sites, though most would not qualify for priority treatment). The New York Times yesterday carried the enclosed report of revised estimates by various agencies of the Federal Government... The office of technology assessment has found 10,000 sites that qualify for priority action, and it estimates that the cost of clean-up may reach $100 billion. That office observes that the EPA has only 528 sites on its priority list and has given "remedial clean-up attention" to only 30% of them. The EPA disputes those figures, saying there are 800 sites on its current priority list, with another 1,200 likely to be added. The general accounting office is preparing its own report on the toxic waste programme that will be issued shortly. One official in the office estimates that there potentially are some 378,000 sites, thought most would not qualify for priority treatment.

The Times: Blind man's buff takes over in the Revenue avoidance game

Thirteen years and several court cases later, the House of Lords ruled that the tax inspector suing Mr Dawson was right. The scheme had no business purpose other than the deferment of tax and, therefore, could not be allowed. the case of Furniss -v- Dawson was finally laid to rest.

The decision was the latest in a series which has changed the face of tax planning and encouraged the Inland Revenue's anti-avoidance crusade, inspired by the tax avoidance schemes devised and marketed to great effect by the Rossminster group of companies in the 1970s.

The wording of Lord Brightman's judgment in Furniss -v- Dawson appear to have widened the scope for the Inland Revenue to clamp down on tax avoidance schemes. Apparently, even a scheme with a legitimate commercial end may still be caught if it includes a step which has no commercial purpose other than the avoidance of a liability to tax to no business effect.

To reduce the uncertainty, Mr Hardman advocates that an independent tribunal be set up to assess the acceptability of schemes. He says: "The tribunal should consist of Inland Revenue representatives, accountants and members of the business community. They could make instant decisions to reduce the uncertainty and make life easier for everybody."

Daily Telegraph: Lloyd's tussle with Revenue

Negotiations between Lloyd's and the Inland Revenue have become tense as the insurance organisation tries to maintain some of its tax privileges.

The Revenue had been first alerted to lost tax by the revelation of the series of scandals which showed some Lloyd's people had misappropriated up to £100 million.

In pursuing these funds the Revenue has started to question the whole established Lloyd's procedure for minimising tax.

One of the important methods has been the "rollover" policy which has enabled syndicates to shift cash to tax havens during high-profit years, by making payments seem like reinsurance.

Then during lean years of low or nil tax the money is remitted.

There are several other tax-efficient ploys being examined, and under the Revenue's wider powers of discretion stemming from a recent House of Lords decision, many of these may be ruled "unacceptable".

Peter Miller, chairman of Lloyd's, with a small team has taken on the important negotiations which had been at one time handled by Ian Hay Davison, chief executive.

Lloyd's List: Bid to clarify law on illegal underwriting

The Attorney General is to help clarify the law on illegal insurance underwriting, the High Court in London was told yesterday.

Sir Michael Havers has appointed barrister Mr David Latham to act as amicus curiae - a friend of the court - in a case involving Lloyd's syndicate 173 and the South Korean reinsurer Oriental Fire and Marine.

The move follows a decision by Mr Justice Neill in a case involving the Bedford Insurance Co of Hong Kong and the Instituto de Ressagrous do Brazil in November.

He ruled that the Bedford could not collect reinsurance claims from 1981 and 1982 because neither it nor its underwriting agent had been authorised to do business in the United Kingdom.

Lloyd's List: Underwriter in bid to clarify ruling

A representative Lloyd's underwriter has started an action in the High Court in the hope of clarifying the recent decision in the Bedford Insurance Co. case, whose "horrendous" implications were said to have left the market "in a state of shock".

In that case, a dispute arose involving various overseas reinsurers, a High Court judge decided that where an insurance company carries on a class of business in Great Britain, defined in the 1974 and 1981 Insurance Companies Acts, without the authorisation of the Department of Trade, any contract entered into is void.

It is also illegal to pay claims in the course of such unauthorised business.

Outlining what he described as the "very unusual circumstances" of the case, Mr Anthony Coleman QC told the court his client, Mr Brian Stewart, of the Lloyd's Syndicate 173, had claims totalling US$334,000, Can $33,000 and £113,000 against a South Korean reinsurance company, Oriental Fire & Marine Insurance.

He said that Oriental, represented by Mr Kenneth Rokison QC, was taking "a completely honourable position."

The firm was not trying to evade its contractual obligations, but if payment was illegal it feared nits own reinsurers could also refuse payment.

Mr Coleman said Oriental was not itself pleading the contract was illegal. It thought the Bedford decision was wrong. The judge commented: "They are not alone in the market in thinking that."

The Attorney General has appointed Mr David Latham as amicus curiae in the case.

Syndicate 173 had facultative reinsurance with Oriental and another South Korean company, Hai Dong, since 1975 on a policy covering the International Federation of Airline Pilots Association against loss of pilots' licences through personal accident or sickness.

Oriental, which carries on business in Seoul, empowered a Liechtenstein firm, Safeguard Registered Trust, to make contracts of insurance on Oriental's behalf.

Safeguard appointed as sub-agent, World Underwriting Agencies, a London firm which has since been dissolved.

World Underwriting could not make contracts on Oriental's behalf, but referred such matters back to the trust.

None of these companies asked for, or received, Department of Trade authorisation to carry on insurance business in the UK.

Mr Coleman said if the Bedford decision was right, it appeared the Lloyd's underwriter would not be able to recover under the reinsurance contract although for nine years all parties had assumed it was binding.

Mr R J Kiln of R J Kiln & Co. Ltd, underwriting agents, a former leading international reinsurance underwriter, said in a statement to the court that the "horrendous" implications of the case struck at the very root of the international reinsurance business.

He said no insurer, trading without authority, would pay its claim once it realised the reinsurer could repudiate.

The Bedford decision would throw the industry into disorder, and punish the innocent public.

Mr Coleman's argument is that Oriental was not in fact carrying on business in Great Britain, and that in any case the prohibitions in the Acts, which refer to certain classes of business, do not, expressly or by implication, prohibit individual contracts.

Ernst & Whinney meeting of insurance partners and managers. 2. In response to a request for any other matters which people felt ought to be raised, Steve Abbott reported that he had obtained a copy of a report by [A] on Agent Orange in relation to Dow chemicals. Although this report gives high figures which might apply on certain assumptions, these are not firm reserve recommendations and the market is treating the document as information rather than as a claims advice. Steve will pass this report to John Philpott so that an appropriate note can be circulated. 3. The increasing tendency to take out aggregate excess of loss reinsurance contracts which were simply banking / saving policies was discussed in the light of the recent publicity surrounding Commercial Union. 5. Peter Standish stated that the insurance partners saw all staff as having a valuable part to play in client maintenance which must precede client development. Clients expect the Ernst & Whinney personnel they meet to know a great deal about the industry .

Letter from Attorneys to CJ Ayliffe, Merrett syndicates and John Heath. RE: Asbestos insurance coverage cases. Enclosed is a recent note from the Harvard Law Review dealing with the adjudication of asbestos coverage. I haven't read the Note in its entirety but in general it blatantly asserts that the intent of the contracting parties is irrelevant and the interest of the asbestosis victims is paramount, leading to a conclusion that continuous injury should be the trigger of coverage. I pass it along for your general background information.

An attorney's report stated about $1 billion in compensation and litigation expenses had been spent by the end of 1982 on more than 20,000 open and closed asbestos product liability claims. Many times that number of people have been exposed to asbestos, and the potential liability of the defendant firms runs into billions of dollars. Three major corporations have already filed chapter 11 bankruptcy petitions.

The Institute for Civil Justice of the Rand Corporation to James Ayliffe, Merrett syndicates. I have enclosed a working draft of our second report on the costs of asbestos litigation. It investigates factors that help explain variation in compensation and expenses. Asbestos litigation is as difficult to do research about as it is important to understand. If you have any comments on the data or their interpretation, I would appreciate receiving them before April 16 when we will begin making final revisions prior to publication.

Executive summary: Asbestos-related disease and consequent litigation involve enormous personal and economic stakes: about $1 billion in compensation and litigation expenses had been spent by the end of 1982 on more than 20,000 open and closed asbestos product liability claims. Many times that number of people have been exposed to asbestos, and the potential liability of the defendant firms runs into billions of dollars. Three major corporations have already filed chapter 11 bankruptcy petitions and identify the costs of asbestos litigation as one of the reasons for filing. These costs (both compensation payments and litigation expenses) are a major concern to the claimants, the defendants, their insurers and the public.... The asbestos calamity may be unique in scale and intensity, or it may be the forerunner of a wave of environmentally based injury claims of unprecedented dimensions.....(106) Implications in summary, the heart of the asbestos litigation problem is its huge scale. Much human suffering is involved. Tens of thousands of the current and future injury claims are worth billions of dollars. The sheer numbers stretch the ability of some Courts to handle the claims, threaten the economic survival of some defendants, and ultimately threaten the ability of the injured parties to receive fair compensation. Because the asbestos problem is immense and because it may influence public reactions to other major health and legal problems, many different responses have been proposed. Several generic lines of reform have been suggested by various people: increased co-ordination and efficiencies within the existing tort system, establishment of a joint claims Facility for settlement negotiation without filing a lawsuit; arbitration; and government-mandated compensation systems. We believe that any rational course of action must be based on facts such as those developed by this study.

United States -v- Stringfellow, 20 ERC 1905, 14 Envtl. L. Rep. 20,385, 1984 WL 3206, U United States District Court of California District, 5 April 1984. United States District Court of California held joint and several liability finding for waste disposal site permitted under CERCLA, RCRA and California state law. Court found that the imposition of joint and several liability was justified after finding that harm caused by the toxic waste disposal site at issue and the effects of the commingling of different wastes was indivisible. District Court had discretion to use equitable factors in apportioning damages in order to mitigate hardships of imposing joint and several liability upon defendants.

WIR: Asbestosis and Beyond: UK Reserving and R/I Enquiry. This refers to the Department of Trade Questionnaire.

In a move to inform itself and, eventually, to influence reserving and underwriting standards for the better, the now apparently anxious UK supervisor, the Department of Trade and Industry, is asking all authorised insurers and reinsurers about their world-wide exposures to industrial disease claims. DTI particularly wants to know about potential long-tail asbestosis liabilities in the USA, byssinosis (textile fibre dust inhalation disease) and industrial deafness. The existence of the inquiry was disclosed at a London conference last month by DTI assistant secretary Michael Hoddinott. It appears to mesh in with a broader program of investigation into new means of reinsurance control and relations between primary, particularly casualty, underwriting and reinsurance in which some European supervisory authorities may collaborate. The DTI has since circulated a private and confidential letter asking companies if they have written industrial disease/injury business (e.g. through employers' liability/workers' compensation or product liability) anywhere in the past 50 years, whether any of it was in the named risks, whether and in what amounts there had been any claims since 1 January 1980 or indications of claims-pending, whether and how much IBNR provision they have for such claims and the extent to which the named disease/accidents and the IBNR are reinsured.

At a conference in London last month, Michael Hoddinott, the DTI assistant secretary, and Colin Smith, a senior chartered accountant with Peat Marwick, outlined some parts of a possible future timetable. Mr. Hoddinott said the UK supervisor was increasing co-operation with its counterparts in some EEC member countries on the subject. A future conference of European supervisors is likely to consider, for example, a paper on the security of reinsurers internationally. In 1982-83 the DTI required for the first time that companies disclose their major outward protections and identify the reinsurers at home and abroad from which reinsurance is bought. Lloyd's is introducing similar requirements under the new Lloyd Act for its underwriters. Mr. Hoddinott indicated that this was not the end of the matter: the DTI in future would closely scrutinise the suitability at all stages of UK-authorised insurers' overall reinsurance programs.

(1). Some primary insurers follow the practice of setting their reserves to the level of their net retention: this effectively prevents the reinsurer from learning about claims until loss payments exceed the retained levels, and the primary insurers need to recover the excess from the reinsurer.

The expenses involved in pursuing claims, which can be significant in the case of major losses, are also often omitted from calculations, and can seriously distort reinsurers' results and rating assessments. If a reinsurer reviews the primary company's claims, this could assist the primary company in providing fuller information, and help the reinsurer to understand the claims-reserving philosophy of the ceding company, Mr. Harding says.( l ) Paper, "Some Observations on Excess of Loss Treaty Claims Reserving in Canada", 27 February 1984.

• The US Securities & Exchange Commission has proposed a rule that would compel property-casualty insurers to disclose information about their loss reserves in 25 business classes and indicate if they under-or overestimated liabilities. Data is now submitted only on total reserves: the breakdown would be intended to help investors' decisions.

The Disclosure of Interests Byelaw (No. 3 of 1984 9 April 1984)

(a) the restoration of confidence in Lloyd's at home and abroad;

(b) the completion of the necessary framework of self-regulation;

Meanwhile, I have pleasure in presenting the Annual Report and Accounts of the Corporation for 1983. You may notice various changes in its format, as we continue to modernise the presentation of the Report and Accounts. One particular change this year lies in the date; previously the Report has been described on a two year basis, for example 1982-1983, based on the fact that traditionally the Report is presented and the Accounts adopted at a General Meeting in mid-year. However. the Accounts are clearly those on an annual basis and I believe that the Report should follow the same calendar and relate to 1983. While this shortens certain events described in the Report. nevertheless I hope that you will find the review of the Corporation's activities to be interesting.

These are exciting, if difficult, times at Lloyd's. There are serious problems in the Market still to be overcome, but I am sure that we shall do so.

I believe that the Market is well placed to take advantage of the upturn in insurance markets generally, which now and at last seems really to be taking place. Lloyd's retains the confidence of its policyholders, Names continue to wish to invest in Lloyd's in large numbers, we offer the strongest policy of insurance and the great spread of our Market means that we can respond with swiftness and flexibility to the needs of the insuring public.