Dow Jones News Service: Exxon-Lloyd's: Exxon to receive $300 million as Partial Settlement; Trial on Other Claims set for 8 April.

Irving, Texas - DJ - Exxon Corp. Exxon said it will receive $300 million under a partial settlement of its suit against Lloyd's of London and other underwriters to recover insurance for Exxon's expenses related to the 19689 Valdez accident and oil spill.

Exxon said that while it is "pleased" with the partial settlement, it still has "substantial" unresolved Valdez-related insurance claims pending with Lloyd's and other underwriters. A trial date of 8 April has been set in Texas state District Court in Harris County, Texas, to address those claims, Exxon said.

Financial Times: Insurers of Merrett agents declare policies invalid.

Managing agents at Lloyd's of London facing claims by hard-hit investors in the Merrett syndicates have been told that their insurance policies against such actions are invalid.

Solicitors for the insurers said yesterday that because the judgement in the Merrett case found that investors had been "wilfully" misled, the errors and omissions policies were void.

The move will be challenged vigorously by the agents and by Merrett Names - the investors whose assets have traditionally supported the insurance market. If the insurers are successful the move could expose other parties to the action to potentially higher claims - especially Ernst & Young, the Merrett syndicates' auditors.

In November the High Court ruled in favour of 2,000 Names on Merrett syndicates, having seen fresh evidence of negligent practice at the market.

The Merrett case centred on "run-off" contracts agreed in the early 1980s by which Merrett Names took on responsibility for claims outstanding on policies sold by other insurers. These left Merrett Names facing rapidly escalating bills for unforeseen US asbestosis and pollution claims. For the first time auditors were also found to be negligent - paving the way for all auditors involved in litigation to make contributions to the market's recovery plan.

A number of Lloyd's agencies handling Names' funds and Mr Stephen Merrett, the underwriter and former deputy chairman of Lloyd's, were also found negligent in the way that they had handled their business.

Clyde & Company, solicitors to the errors and omissions insurers, said: "This is not something that we have relished. The judgement was so fierce - we have been driven to take this step." The solicitors confirmed that the Merrett managing agency had been informed the cover was "void".

"This was prompted by the very trenchant findings of the judge about the behaviour of the Merrett managing agency - particularly that they wilfully withheld information in some matters." Clyde & Company said: "The terms of the judgement took our clients by surprise. The strong implication is that if the Names were kept in the dark - then so were the underwriters."

Mr Nick Land, senior partner of Ernst & Young, said: "The whole thing is still a moving feast but this does indicate the uncertainty which springs from the injustice of joint and several liability."

The parties in the Merrett case are attending hearings in the High Court which will decide the principles on which damages will be set. Names want an interim payment while seeking total damages of up to £300m.

Annual Meeting of the Institute of London Underwriters: Statement by the Chairman, Mr L N Campbell

But we cannot put everything in the ILU Notebook. Last year I referred to the agreement between Nationale Nederlanden and the ILU regarding claims arising on certain Institute policies issued on behalf of the Orion Insurance Company and the London & Overseas Insurance Company, both of which, as you know, are in provisional liquidation. To date, the funds remitted to policyholders under the facility are just short of US $36 million.

You will know too that English & America Insurance Company, a former member of the ILU, is also in a scheme of arrangement. As a result of an agreement with a former owner, Marsh McLennan, holders of ILU policies during the time that Marsh McLennan owned the company are having their claims paid in full.

Daily Mail: Lloyd's sees an end to five years of losses

It's official: Lloyd's of London is back in the money after a nasty run in the red over the five years up to 1992 when it lost £8bn, the equivalent of one year's premium income.

David Rowland, chairman of the troubled insurance market, forecast yesterday that Lloyd's will make around £1bn profits in each of the three years 1993, 1994 and 1995, for which accounts have yet to be seen.

Lloyd's is approaching ‘the last stage of its recovery', according to Rowland. It will complete if members agree to settle their outstanding lawsuits.

He believes they will be swayed by the return to profits and fear of ‘the alternative'. Lloyd's would have to appoint liquidators ‘and there would be no sympathy for those who have lost a lot already'.

Daily Mail: The bitter lessons from missing billings at LUI

What was the biggest company collapse in British history? Maxwell Communications? Bank of Credit & Commerce International? No, first prize goes to London United Investments.

Yet, while MPs and policemen have huffed and puffed about Maxwell and BCCI, the scandal of LUI and its missing £5bn - possibly more - has gone almost unnoticed.

This is all the stranger since British people pay a levy each time they take out an insurance policy. It was only 0-25pc last year to raise £48m. But this little bill could run to a wretched £500m, paid by you and me.

Even more galling, the cash does not even pay claims to British policyholders. Instead, the Policyholders' Protection Board is shipping it to the US to cover negligent claims against US doctors and lawyers.

It sounds crazy, and it is. But even odder events are unfolding at Lloyd's, where all too many of LUI's duff American insurance policies were reinsured. As that insurance market nears its make or break final settlement, all manner of insurers, US and British, are trying to cut deals to grab cash while it is available.

A policy might seem to guarantee £1m of cover. But if a reinsurer is going to fold before claims fall due, it could make good sense to settle for a smaller amount now, while there is cash in the kitty. The grand word for this is ‘commutation,' and there is a lot of it about.

First, a bit of history. LUI was run by a gentleman called Ronnie Driver. Rumour has it he would have rather liked a knighthood. LUI's board was adorned by the presence of Prince Michael of Kent, whose status at executive or non-executive was never explained. LUI's many offshoots specialised in liability cover for American business. Its customers ranged from huge companies such as Kraft Foods down to individuals and partners in the US professions.

Where other insurers feared to tread, LUI was eager to take customers' money and write them a policy. As a fairly small company, it could not keep all the risk for itself. It shared the odd billion with a host of reinsurers working in the London market. For this, it needed the help of insurance brokers, and few were more helpful than former Sedgwick vice-chairman Jim Payne.

Many of the Lloyd's syndicates that suffered heavy losses were eager customers of LUI and Payne. The LUI story was also enlivened by the £35m of premiums that Driver and two other directors diverted to Liechtenstein.

It was the uncovering of this by LUI director Colin Forsyth that helped to trigger the collapse into administration in May 1990. In September 1993, Department of Trade inspectors reported scathingly on the scandal. But, more than two years later, the Serious Fraud Squad has still not acted.

LUI's operations are now managed by accountant Coopers & Lybrand under a scheme of arrangement that avoids formal liquidation. So far, Coopers have paid out 8pc of recognised claims. Partner Ian Bond reckons he might eventually reach 40pc, if the liabilities settle out at $6bn. If they top $10bn, the dividend will be nearer 24pc, leaving a massive £5bn shortfall.

This all assumes LUI's assets are solid. But Lloyd's syndicates may have other ideas. They now answer to Equitas, the £16bn company set up by Lloyd's to handle all pre-1993 policies. Equitas needs every penny and is understood to be telling the syndicates to get tough. Caught in the middle, some syndicates are pressing for a 90pc commutation. US insurers are currently horse-trading for whatever they can get. A massive discount may also not be quite as outrageous as it sounds. A small amount invested today can fund a large claim several years down the line.

But any settlement near 90pc would blow a gapping hole in LUI's numbers. Understandably, Ian Bond is adamant he will accept nothing of the sort. "We would sue Equitas and Lloyd's if we had to," he says.

No doubt, some sort of compromise will be reached, and the slow agony of LUI will continue. Why has this whole scandal raised so little attention? Maybe because the main losers, the policyholders, were far away in North America. Maybe also because the UK end of the mess has been merged into the general fiasco at Lloyd's

Bond puts the blame on a mixture of reckless underwriting combined with runaway settlements in the US courts. Are there any lessons still to be gleaned? Insurance will always be a promising ground for cowboys. It is hard to regulate because it crosses international borders.

Even where the authorities do scent trouble, it is often far too late for them to repair the harm. The whole episode has done terrible damage to the City's reputation. A full and very public inquiry into LUI and its role at Lloyd's is years overdue.

Financial Times: Further delay on Lloyd's vote expected

Sunday Telegraph: Germans buy Lloyd's

Evening Standard: 60 dead as Arctic cold grips America

Independent: Names face £100,000 bill to end liabilities

Times: Debt cap expected for all names

Financial Times: Lloyd's chairman faces court writ

Daily Telegraph: MP's plan further inquiry into workings of Lloyd's

Lloyd's of London is to be the subject of an inquiry being planned by the cross- party Treasury select committee, which published a damning report on the insurance market last year.

That report from the committee of MP's claimed that the current system of self-regulation at Lloyd's had been "irretrievably tarnished" and called for external regulation. It also recommended a public inquiry into allegations of a 1980s conspiracy to suppress information about asbestos-related insurance claims.

The government agreed to review regulation at Lloyd's, but not for two years saying the market's structure was changing quickly. The government ruled out a public inquiry because it had seen no evidence that would merit it.

But the committee, frustrated at the government's response, is now planning its own investigation. Since supervision of Lloyd's is the responsibility of the department of Trade, not the Treasury, the MPs are planning an investigation of regulation of the insurance market as part of their long-running inquiry into City regulation.

The Lloyd's market regards the committee's interest in its affairs - spurred by correspondence from constituents who are Names - as a diversion from the urgent task of saving the organisation. A further inquiry is unlikely to be welcomed.

Conservative committee member Matthew Carrington said; "We've made no secret of the fact that we found the government's response to our report on Lloyd's unsatisfactory."

Daily Telegraph: Lloyd's pay rises to top rate of inflation

Times: Lloyd's plan

Times: Many a slip possible as Lloyd's nears final hurdle

Evening Standard: Price of letting Lloyd's fail

Daily Telegraph: Court attack on Dunlop for tyre fault

Daily Mail: Asbestosis miseries rumble on at T&N

Evening Standard: Lloyd's rescue faces bumpy ride in final furlong

At the end of this week 32,000 members, the Names, who support the insurance market, will be told of the financial consequences of the ambitious rescue plan now underway.

The events taking place in the nest few days represent a landmark the 300-year history of the market. For the first time, Lloyd's central administration has become involved in preparing financial statements for each individual Name, reflecting the seriousness of the difficulties. Usually it is a job left for the underwriting agents. This time they are reduced to no more than post boxes.

A rescue after more than £11 billion of losses over the last few years carries a high cost. Little outside money is being injected to help. Instead, Names existing funds at Lloyd's are to be adequately financed to deal with future liabilities.

If, on current projections by the authorities, further support is needed for the new Equitas vehicle to deal with individual Names' liabilities, more money will be sought from them. Some members, because they have sufficient funds, may not be required to pay anything extra while others will face demands.

Names will be studying the first estimates of what is required is weekend. The bill for members may top £600 million.

Lloyd's aims pump in a total of £5.9 billion into the Equitas project, which together with existing reserves of Names should give the new company assets of up to £13.5 billion.

Names will receive a credit from Lloyd's amounting to £2 billion to help with the Equitas financing and those Names who have gained victory or near victory in the courts over losses will receive a further £800 million.

There are winners and losers in this operation which will create tension and difficulties.

For instance, those who have sued Lloyd's companies successfully will only receive about a half of what they were awarded by the courts. The market hopes the £800 million will bring to an end outstanding litigation.

Officials have argued that while litigating Names face a reduced cash settlement, they will gain the certainty that their losses will not rise above present levels if they accept the rescue plan. If Names agree to the scheme they must waive their rights to future litigation.

Other losers include these who have traded through the difficulties despite having made losses. Half of all Names, although still on Lloyd's register, stopped underwriting over the last few years while the remainder tunnelled through.

Those who did trade on are resentful that their funds are being used for the rescue. Helping other Names in a market not based on the principle of mutualisation is undesirable, they argue.

The say the proposal to limit further demands against names who claim to be the worst hit to £100,000 is unfair. How deserving are some of these cases and how widely is Lloyd's going to test individuals means, they ask?

Moreover, other Names who intend to remain with Lloyd's are worried that they will have to meet the future financial costs of Equitas if things go wrong.

They say Lloyd's will find it impossible to recover assets from members who have been bailed out and left the market as they will have taken suitable precautions against being traced.

Against this disputations background, the communities hard-pressed officials will find it increasingly difficult to gain the support for the plan it desperately needs.

Daily Telegraph: Rowland slashes Equitas funding to £1bn

Daily Mail: Blast from the past gives Fleming American a jolt

Evening Standard: Names threaten against Barclays

Financial Times: Accountancy - What the chairman should have said

Daily Mail: Lloyd's blocks move to check syndicate's losses

Lloyd's of London is blocking moves by Names to sort out their own syndicate. It has written to names on the giant syndicate 190, telling them it will force the appointment of its chosen managers, Whittingdon.

More than 400 Names had written to current manager Cater Allen telling them to hand over control to their own Names Association. Syndicate 1290's affairs are crucial, because it handled reinsurances for London United Investments, the insurer that collapsed in 1990 facing losses of £6bn.

Lloyd's insiders predicted losses of £1bn or more at 190. But the indicative offer from Equitas, the new company that is taking over old years, put the figure at £100m. Lloyd's chairman David Rowland used to chair broker Sedgwick, which managed syndicate 190 in the Eighties.

Times: The bitter bills to swallow

Financial Times: Tobacco industry dealt new US blow

New York Times: State Regulators Co-ordinate Lloyd's Inquiry

The North American Securities Administrators, a group of state regulators, have formed a group to co-ordinate the eight state cases filed so far that accuse Lloyd's of breaking securities in its dealings with American investors, Karen A. Silva, assistant director for the Arizona Corporation Commission, said on Friday.

The state committee could be the first step of a formal regulatory task force investigating Lloyd's. So far, Ohio, Arizona, Illinois, Colorado, California, Missouri, West Virginia and Pennsylvania have filed cases against Lloyd's, Ms. Silva said.

The increased state investigation comes at a difficult time for Lloyd's. It lost more than $12 billion in the five years ended in 1992 because it paid out on a wide variety of insurance claims for asbestos lawsuits, hurricanes and earthquakes in the United States.

Financial Times: Sedgwick's £3.5m bonus pay-out.

Seven directors of Sedgwick group earned a total of £3.5m from long-term profit share scheme, according to the insurance broker's 1995 annual report.

It also revealed in the report that it had introduced performance criteria, to its executive share option scheme. The previous scheme, put in place in 1988, had no specific performance conditions attached.

Mr Jeremy Pinchin, company secretary, explained that the initial scheme was "very limited" and "open to senior executives at a time when we were at the peak of an underwriting cycle. We wanted to protect or senior executives from being poached." The large sum reported for 1996 represented seven years of accumulated bonuses.

Last year Sedgwick's profits before tax and exceptionals slipped to £91.3m ($94.3m), while earnings per share rose 12.6p (11p).

Times: Names court win could be worth £200m

I confirm that I will recommend the following proposals to the Council subject to the proviso that the revised Equitas premium calculations do not improve the position of the litigants to such an extent as to make these proposals unreasonable, and subject to the provisions of the next paragraph. The litigation Settlement Fund should be increased to £1 billion. Groups who have received favourable Judgements prior to 31 December 1985 should receive 38% of their loss to finality. Those groups with funds in escrow should also receive what we are describing as an "escrow cap". This should be a reduction in their finality bill to be taken post Tranche 3 Debts Credits. This amount will be 75% of the damages received by their solicitors. For example, if the overall cap was £100,000 a Name whose share of received damages was £40,000 would only have to pay £70,000. However, this benefit would have a limit of £50,000.

Such proposals should benefit all litigating Names and particularly those whose damages are frozen by the PTD litigation. They are made on the basis that the PTD hearing will be adjourned and that you will express positive and public support for these developments and the likelihood of a final settlement of the litigation.

The Times: Action will decide if Lloyd's can seize awards.

A crucial High Court action begins tomorrow that will decide whether Lloyd's of London has the right to seize any court awards made to litigating names. Thousands of litigating names have already won hundreds of millions of pounds of damages from High Court actions and more are in the pipeline.

Before launching its offer to names last year, Lloyd's had sought approval from the Department of Trade and Industry for planned changes to names' premium trust deeds (PTD's). These changes would give Lloyd's the first call on any court awards or settlements to names where those names have outstanding debts to the market. In March 1995, Michael Heseltine, then President of the Board of Trade, approved the changes subject to a legal ruling.

Daily Telegraph: Lloyd's faces up to the hazards

North American Securities Administrators Association, Inc.: Media Release - State Securities Regulators Announce Extension of Stand-Still Agreement with Lloyd's of London.

The month-long "stand-still" agreement, previously announced on 3 April, is extended until 15 May 1996. The agreement prevents Lloyd's from drawing down on letters of credit supplied by American investors in every state or tapping their other assets. After 15 May, Lloyd's has agreed to provide 14 days written notice to each investor and his or her state securities administrator before drawing down on a letter of credit.

"Due to this agreement, the nearly 3,000 U.S. investors who want nothing more to do with Lloyd's will not have their letters of credit drawn down on 1 May," said Des Harris, NASAA president and Arizona director of securities. "This should give them a measure of peace. Meanwhile, our committee will continue to negotiate with Lloyd's in an attempt to reach a final resolution of this matter."

The Financial Times: Travelers/Aetna Property Casualty Corp., a Member of Travelers Group

Smith Barney Inc. - Lead Manager in the Share Offering of $2,474,482,850, dated 2 May 1996.

The Financial Times: Terra Nova (Bermuda) Holdings Ltd

Share Offering of Class A Ordinary Shares, dated May 1996.

7,200,000

Wall Street Journal: Lloyd's Members in U.S. have a Right to Sue in This Country, SEC Contends.

Ending a long silence over Lloyd's recruitment operations in the U.S., the SEC filed an amicus brief partly supporting 600 disgruntled American "Names" who had sued Lloyd's. The case is now before the U.S. Court of Appeals in Los Angeles. The agency said a lower court was wrong when it ruled that Lloyd's members waived their rights to sue the huge insurance market in the U.S. by signing a "forum selection" agreement with Lloyd's.

Daily Telegraph: Rowland slashes Equitas funding to £1bn - Lloyd's offers Names improved terms and relaxes funding of lifeboat rescue

LLOYD'S of London chairman David Rowland yesterday gave a double boost to plans for the insurance market's rescue with a steep cut in the funds demanded for its new lifeboat and an increased offer to members who stop litigating.

The money to be levied from the membership for funding Equitas, which will take on Lloyd's old liabilities has been cut from £1.9 billion to about £1 billion. The total package of debt write-offs and compensation for litigating members has been raised from £2 .8 billion to £3 1 billion.

Michael Deeny, chairman of the Gooda Walker Action Group and of the Litigating Names Committee praised the move to demand no more cash from members who have conscientiously paid all their losses but wanted in addition a reasonable standard of living for members driven into penury by their Lloyd's losses.

The need for a home and an income for the indigent, and especially the old, was echoed by most of the organisations of Lloyd's Names. But Christopher Stockwell, chairman of the Lloyd's Names Association Working Party wax as usual more combative "There is absolutely no way our members will accept this; as the final offer ‘‘ he said

He claimed most action groups think them should be a substantial improvement in the offer. The £100m contribution from the four firms of auditors and another £100m from brokers was "a pretty poor deal - we have legal claims against them of £1+ billion," he said

John Mays, of the Merrett Names Association has already won a case against auditor Ernst & Young and also thought the accountants' contribution "is rather small." But if his members get a fair share of it they will vote for the new plan.

The improvement in the settlement offer came also from getting £20m more than expected for Lloyd's assets: the sale and leaseback of its two buildings and the disposal of Lloyd's of London Press.

Lower funding for Equitas was simply the result of greater optimism about future claims, and about the ability to recover money from reinsurance, said Mr. Rowland. Mr. Stockwell claimed the recalculation "fills nobody with confidence." The reworked figures mean 6,000 members will get some money back.

Mr. Rowland said the latest set of plans balances "as fairly as possible all constituencies within the Society and continues to provide policyholders with the security they have come to expect from a Lloyd's policy." He urged members not to let "misdeeds that have taken place to cloud the very good business we have here." Chris Messer of the Janson Green Action Group said agents need to pop in a few extra million but "I think it stands an excellent chance of getting through.'' Other action group chairmen thought there was a core of at least 10pc who would vote against almost any proposal but most of the rest would probably accept the deal.

Lloyd's still has substantial problems in America where the Securities & Exchange Commission has entered the legal lists on the side of litigating members.

Daily Telegraph: City Comment: Settlement time in Lime Street

Lloyd's of London thought that it could buy its way out of its endless troubles two years ago by offering its Names £900m. But experience has made the members hard-nosed as well as hard-up, and their can't-pay, won't-pay stance has forced Lloyd's to come back with increasingly better offers.

By February the settlement offer was up to £2 8 billion, and now, after searching behind the cushions of the Lime Street sofas and in the linings of their pin-striped suits, the council has raised that to £3.1 billion. At the same time another look at the liabilities of Equitas, the company that will take on the outstanding pre-l993 business, revealed that things are less bad than feared: the premiums due can be slashed from £1.9 billion to £1 billion.

Persuading brokers, agents and auditors to contribute has involved a big effort from Lloyd's. Like so many of its members, it has even had to sell its own home to fund the gap, and they felt vindicated in holding out for more. So yesterday's reaction from the dwindling band of rebel Names was not to congratulate the council but to strengthen their resolve to resist.

It is just possible that Lloyd's or the professional firms which will profit from securing a future for the City's insurance market can find a few bob more, but the end is now in sight, both of the increasing offers and the serious resistance. The number of Names that can expect a rebate doubles to 10,000 or almost a third of the total vote, while raising the litigation settlement fund from £800m to £1 billion should encourage more to agree.

By refusing to extend the terms now on offer to those who refuse them, Lloyd's can this time probably expect most battle-weary members to take the money. The rebellious minority would forgo these benefits, while spreading the cost of pursuing increasingly marginal litigation across fewer shoulders. It looks like time to settle at last.

Saturday Mail: Settlement time in Lime Street

LLOYD'S of London thought that it could buy its way out of its endless troubles two years ago by offering its Names £900m. But experience has made the members hard- nosed as well as hard-up, and their can't-pay won't-pay stance has forced Lloyd's to come back with increasingly better offers.

By February the settlement offer was up to £2.8 billion, and now, after searching behind the cushions of the Lime Street sofas and in the linings of their pin-striped suits, the council has raised that to £3.1 billion. At the same time another look at the liabilities of Equitas, the company that will take on the outstanding pre-1993 business, revealed that things are less bad than feared: the premiums due can be slashed from £1.9 billion to £1 billion.

Persuading brokers, agents and auditors to contribute has involved a big effort from Lloyd's. Like so many of its members, it has even had to sell its own home to fund the gap, and they felt vindicated in holding out for more. So yesterday's reaction from the dwindling band of rebel Names was not to congratulate the council but to strengthen their resolve to resist.

It is just possible that Lloyd's or the professional firms which will profit from securing a future for the City's insurance market can find a few bob more, but the end is now in sight, both of the increasing offers and the serious resistance. The number of Names that can expect a rebate doubles to 10,000 or almost a third of the total vote, while raising the litigation settlement fund from £800m to £1 billion should encourage more to agree.

Daily Telegraph: LUI administrators act to recover $50m

ADMINISTRATORS for five insurance subsidiaries of London United Investments the financial conglomerate that crashed with $10 billion of liabilities six years ago, yesterday claimed "satisfactory" progress in recovering $50m of funds wrongfully diverted to Liechtenstein.

The LUI subsidiaries, known as the Kwelm companies, provided public liability insurance in the United States. They collapsed under a welter of claims related to asbestos and pollution and remain exposed to claims related to breast implants and infected blood products.

Creditors include thousands of American legal and medical partnerships.

A Department of Trade inquiry revealed that $50m of insurance commissions had been "wrongfully diverted" to Liechtenstein companies which were "not genuine insurance or reinsurance brokers".

Chris Hughes, one of the administrators reporting to more than 35,000 creditors yesterday said: " We have conducted a full investigation into Liechtenstein and we have made what we regard as a satisfactory recovery." However, he declined to say how much of the $50m was still missing.

As for the prospects of prosecutions over the missing funds, he said: "The Serious Fraud Office still has an open file."

In his report Mr. Hughes said the administrators had collected $263m in the last year at a total cost of $32m. The total set aside for policyholders now exceeds $900m.

British insurance companies keep a close watch on the administrators' work because under the Policyholders Protection Act they are liable to compensate non-corporate customers of collapsed insurers.

They tried, but failed, to convince the courts that American partnerships lay outside the Act and have reluctantly paid £160m to LUI creditors in the last three years.

Yesterday their trade body, the Association of British Insurers, welcomed the administrators' report, saying: "Obviously we're very pleased."

However, Mr. Hughes warned that "they will pay out more going forward."

How much they pay depends largely on his success in extracting money from LUI's own insurers. They "exhibit the complete range of financial health from ‘robust' to simply ‘bust' ", the report said.

The Financial Times: T & N slips as court rules on asbestos

Three US appeal judges have ruled that a so called "Georgine" settlement - in which 20 asbestos companies agreed fixed compensation payments for asbestos victims - failed to meet the criteria of a class action.

T & N had hoped the settlement would reduce its exposure to personal injury, claims in the US, where it has paid more than £300m in legal settlements during the past 10 years.

T & N yesterday described the ruling as a blow, but said the Center for Claims Resolution - representing the companies - would probably appeal. That process could take up to six months and the case could end up before the Supreme Court.

When the class action was first agreed in 1994, T & N predicted it would lead to a gradual reduction in asbestos-related provisions - which have undermined its profit growth in recent years. However, yesterday, it said: "The rate of decline in new claims could slow over the next three years."

In 1994, the, company; made a surprise £100m provision to meet claims from asbestos victims who opted out of the Georgine settlement. T & N is expected to set aside a further £50m this year and next. Despite the latest ruling it said the provisions would provide more than enough cover for all existing claimants.

Daily Telegraph: US court decision setback for T&N

The company now faces potential rising charges because new claimants will be free to pursue it individually.

"Under the Georgine settlement, our liability was capped, at well below the £50m annual charge," he said.

Even if T&N succeeds in getting many of the additional claims thrown out, its legal bill will be far higher as a result of its having to deal with thousands of individual claims, rather than one large class action suit.

Analysts said the ruling yet again plunged T&N into uncertainty about its future liabilities, just months after it had successfully dealt with all outstanding property claims.

NatWest Markets' Sandy Morris said: "Under the Georgine settlement, we (shareholders) shouldn't have got ambushed for very big, wild costs. That possibility now exists again."

The Times: T & N

Glimmers of light at the end of the asbestos tunnel have appeared and vanished so often for T&N that investors would do best to ignore them. Yesterday's news that the procedures established under the "Georgine" settlement may be crumbling away is another potential blow to T&N, not so much because of the potential for a huge claims but huge legal expenses.

Asbestos-related diseases such as mesothelioma take up to 60 years to show, a time lag that leaves T&N with a long tail of liabilities that it cannot avoid. The collapse of Georgine will increase the legal and administrative cost of servicing the claims. For T&N, that increases the need to generate more cash from its business at a time when its customers, the automotive manufacturers, are demanding more investment in research and development. The best solution for T&N would be a partnership with another components group but one of the candidates, Lucas, has its eyes set on a different deal.

Lloyd's of London's survival hopes took a damaging blow yesterday as Sir Richard Scott, the vice chancellor, ruled that he could not snatch Names' court winnings to pay their insurance debts.

Lloyd's said it would appeal against the judgment and tried to downplay its potential impact, even though chairman David Rowland had told Sir Richard only seven weeks ago the issue was critical to the market's rescue plan.

Lloyd's had tried to change its contract with Names the people who risk all their assets on insurance, so that it could have first call on awards made in their court battles against their agents. Lloyd's feared some Names would take the money and run, leaving their insurance debts unpaid.

In his affidavit to the court in late March, Mr Rowland claimed: "The destination of Names' litigation recoveries is critical to the success of reconstruction and renewal."

In a hastily issued statement last night, Mr Rowland said: "The conditional wording that I used in late March related to the position at that time. Conditions have altered materially since then."

He said all parties were now agreed that the issue needed to be resolved and added, "this may mean it will ultimately be considered by the House of Lords".

All monies currently frozen in escrow accounts, "will remain there for the foreseeable future", he said.

Sir Richard's judgment is a victory for dissident Names' action groups led by maverick Christopher Stockwell who demanded cash now rather than the debt write-offs contained in Lloyd' settlement offer.

Yesterday, a jubilant Mr Stockwell said: "It's good news for the worst hit Names who now have some prospect of getting cash rather than this funny money that Lloyd's is offering."

Sunday Business: US Names set to reject Lloyd's £3-1bn settlement

Any hope Lloyd's of London may have of its £3.1 billion "finality" settlement being accepted in the US could be seriously eroded this week as it emerges that many US Names will reject the improved offer.

And in a further blow, another 20 US states are expected to file their own legal actions this week, bringing the total to at least 30, after the expiry last Wednesday of a temporary stay of action agreed by Lloyd's with the North American Securities Administration Association (NASAA).

The news comes on top of UK Names' court victory in the premium trust deeds case on Friday. The judgment means Lloyd's cannot now force litigating Names to use their court winnings to pay off their debts. Lloyd's will appeal to the Court of Appeal

Ken Schiate, the Californian commercial lawyer negotiating on behalf of US Names, said: "We are not getting finality, but ‘maybe finality'. We need a release and indemnity from Lloyd's in case of any inadequacy or collapse of Equitas."

"States have preserved the opportunity of acting to protect their citizens against demands from Lloyd's," said the NASAA spokesman.

Philip Feigin, chairman of NASAA's Lloyd's co-ordinating committee said: "The states will be following Lloyd's actions very carefully in the weeks to come, and are positioned to intervene at any time should Lloyd's attempt to extract more money from US investors."

NASAA, US lawyers acting for Names and the US Names themselves said they were angry but unsurprised over how Lloyd's has presented its case in the UK press. The US view is that Lloyd's is running a heavy public relations campaign to talk down the US legal position, particularly over the legal actions that are being launched by US states regulators.

The attempt by Lloyd's to absolve responsibility from alleged failures to register its business under US securities laws, by arguing that Names did business with agents rather than Lloyd's itself, is completely rejected by NASAA, said Feigin.

Sunday Telegraph: Lime Street in revolt over £700m ‘take'

Syndicate managing agents are increasing the commissions they take on profits earned on invested premiums, some by more than 20%, and this is provoking a revolt in Lime Street.

Names have borne losses of £11bn in the late 1980's and early 1990's and have seen £2-5bn of their assets redistributed to fund most of the proposed £3-1bn litigation settlement. Now, Lloyd's is going through a period of £1bn annual profits, syndicate managing agents, who are putting £155m into the settlement, are moving fast to increase their take.

Among agents wanting to raise commissions are Cockell, Hiscox, and Cassidy Davis. Willis Faber members, agent James Sinclair said others were raising overall premiums to 15 or 20 per cent and called it "clean, straight greed".

Crains Business: New York's AG readying lawsuit against Lloyd's - Insurer negotiates deal with investors who lost millions; feds launch probe.

The New York state Attorney General is preparing a lawsuit that would charge Lloyd's of London with selling unregistered securities and defrauding state residents of tens of millions of dollars.

The Attorney General's Office will file the suit if it fails to reach an agreement with Lloyd's over steep losses suffered by more than 300 New York investors. Any move by the state attorney general could have national significance because the state Department of Insurance regulates Lloyd's operations in the United States.

"If these discussions aren't fruitful, we are in a position to commence a filing," says a source in the securities division of the Attorney General's Office.

The threat of legal action comes at a difficult time for the 300-year-old Lloyd's, which is close to collapse after eight straight years of losses totalling $12.5 billion.

The losses have spawned a spate of lawsuits from investors, also known as names, and state securities regulators. They claim that Lloyd's playing on its history of prestige and profitability, encouraged investors to dole out millions without disclosing the financial threat posed by claims related to industrial pollution and asbestos-induced lung disease in America. Conservative estimates place the losses suffered by New York investors at about $50 million.

At the same time, the New York division of the US Postal Inspection Service is gathering evidence from investors about Lloyd's dealings in this country. The federal enforcement agency, which typically investigates charges of mail and wire fraud, says that it has received several complaints regarding the British concern.

"We know that they've been asking questions," says Jeffrey Mace, a partner of LeBoeuf Lamb Greene & MacRae, Lloyd's chief law firm in the United States. "We are doing everything we can to co-operate and provide them with whatever information they need."

More than 3,000 U.S. residents invested with the British concern. So far 11 states have sued Lloyd's charging stock fraud and securities registration violation. But a suit filed by New York regulators would have considerably more weight because of the role of the state Department of Insurance. Lloyd's is required by the Insurance department to keep $2.8 billion in trust funds at Citicorp to cover U.S. liabilities.

If the state decides, as many expect it will, to limit its settlement to protecting investors from future losses - and does not seek restitution for money that they have already lost - the legal floodgates are bound to open wide.

The Securities and Exchange Commission gave investors a much needed boost two weeks ago when it filed an amicus brief partly supporting 600 names who are suing Lloyd's in California. The agency said a lower court was wrong when it ruled that names waived their rights to sue Lloyd's by signing an agreement to settle disputes in British courts.

Evening Standard: Names' bill down again

Names were told that the money they would have to provide for financing the new company, Equitas, was to be cut from £1.9 billion to £1 billion. Now it has been decided the amount needed is about £900 million.

Evening Standard: Solvency test raises new questions at Lloyd's

The DTI has told Parliament it regulates Lloyd's lightly, confining itself solely to assessing the financial strength of the market and ensuring that policyholders are protected. Lime Street is left largely in charge of its own destiny, free from conventional legislation.

The inconsistencies between the two solvency tests may be resolved in the future when Lloyd's moves to a more corporate structure as more companies take over from the Names as capital providers.

The case then for the market to be fully regulated by the DTI or some other Government department in the same way as insurance companies will be overwhelming.

Meanwhile, it is not the solvency test that is causing the Lloyd's authorities a headache. The problem is collecting the £1.5 billion still owed by Names to meet outstanding claims.

It will not be an arbitrary solvency test that causes Lloyd's as an entity to founder, it will be poor cash flow. This is why all hopes are pinned on the multi-billion pound reconstruction and rescue package.

Financial Times: Bad weather affects claims

Domestic subsidence and bad weather insurance claims rose dramatically in the first three months of this year compared with a year before, statistics published yesterday by the Association of British Insurers show. Subsidence claims cost £68m compared with £34m in the first three months of 1995. Weather damage claims, resulting largely from a severe freeze around new year, cost £308m, up from £121m. Bad weather also hit commercial property insurance where claims rose from £86m to £111m. Theft claims fell by 3 per cent in domestic property insurance and 25 per cent in commercial.

Financial Times: Awards frozen by High Court

Lloyd's of London has obtained a High Court ruling freezing the pay-out of litigation awards won by Names - even when they do not owe money to Lloyd's. The move - an attempt to persuade loss-making Names to back the insurance market's recovery plan - affects £16m which Gooda Walker Action Group, representing some of the worst-hit Lloyd's Names, hoped to distribute to members. Names are individuals whose assets have traditionally supported Lloyd's. Mr. Michael Deeny, chairman o the Gooda Walker Action Group, said he regretted the latest decision.

Sunday Business: Fresh blow for Lloyd's

Lloyd's of London is heading for another major setback this week when an insurance industry report is expected to show that the beleaguered institution's share of global market capacity has plummeted from over 50% in 1994 to just 12% this year.

The report, which will weaken arguments about Lloyd's indispensability in the insurance market will further discourage Names from accepting the £3.1m finality settlement.

Its timing is bad for Lloyd's, coming during a US roadshow tour in which officials, led by Lloyd's chief executive Ron Sandler, are attempting to clarify the benefits of their reconstruction and renewal plan aimed at cutting the market free of its bad debts.

A US insurance industry source, who is a Lloyd's Name and one of a small handful of people behind the report, said: "It will debunk Lloyd's claims that its collapse would create havoc in the insurance industry. It will show Lloyd's is no longer dominant in the market."

Data in the report will show a massive decline in Lloyd's insurance capacity in the market globally, from 54% in 1994, to 25% in 1995, and a halving again to around 12% for 1996.

"The report shows Lloyd's is going down the tubes, period," said the US insurance source.

US insurance broker Walter Stein, commenting on Lloyd's position in the US market substantiated the apparent drift of next week's report. "Lloyd's business has gone somewhere else. It is not viable business it purports to be. The markets in the US, Germany and Bermuda have astronomical capacity and could pick up any kind of deficiency created by Lloyd's demise in the US," he said. Lloyd's, he added is now "in a life or death situation."

Daily Mail: Names fear secret talks

It has emerged that the financial condition of one of the leading syndicates has deteriorated alarmingly.

At the same time rows were erupting among angry Names - Lloyd's investors - who fear secret deals are being struck. between the market's authorities and influential action group chairmen to buy their support for the rescue.

The syndicate in fresh trouble is 317, once managed by one of the foremost underwriters, Richard Outhwaite. Its 1,614 investors included the former Prime Minister Sir Edward Heath, who resigned last year, and the late publishing tycoon Robert Maxwell.

Syndicate losses had been running at nearly £400 million for the 1982 underwriting account and its books could not be closed because of the uncertainties. Lloyd's intends to transfer this syndicate's liabilities along with the liabilities of all the 34,0009 Names, to a new rescue company Equitas.

Names, however, will have to transfer part or all of their existing Lloyd's funds to the new company to ensure that it is properly funded and many may well have to pay more from their own resources. Equitas will then meet all outstanding insurance claims on behalf Names.

The Equitas team and syndicate managers have decided that more money is required for the Outhwaite syndicate. The total has been increased from £491 million to £600 million.

Already the Names have given £252 million towards the payment, but a further £348 million will be required. And Names are to be told that a further £310 million will be required on the Outhwaite 1990 account to pay for Equitas.

Daily Telegraph: Lloyd's gives warnings to US

LLOYD'S of London chief executive Ron Sandier has issued a stern warning to American members and regulators that if they prevent the British insurance organisation's financial reconstruction, large numbers of American insurance companies would collapse.

Without the reorganisation, which involves cash raising and segregation of old liabilities, Lloyd's will not be able to pass the Department of Trade's solvency test in August. That means it would have to go into receivership.

That in turn means American companies would be unable to use their reinsurance contracts into Lloyd's as part of their own reserves. According to the National Association of Insurance Commissioners in America results would be "immediate and devastating".

The association recently intervened to prevent the freezing of Lloyd's assets by the California Department of Corporations. In a law suit statement, association president Brian Atchinson said: "Many major US insurers have some form of a business relationship with Lloyd's."

Inability to claim Lloyd's reinsurance as assets "would render a number of these insurers statutorily insolvent and might necessitate formal action against them". As some may themselves have reinsured other US companies, those policies would also become invalid. "That could have a ‘domino' effect, bringing down insurers, which themselves may have had only a marginal relationship with Lloyd's."

State associations are obliged to take on responsibility for claims unpaid by insolvent insurers, and would have to raise funds from existing companies. That levy, adds Mr Atchinson's statement, could maim the surviving businesses.

In addition, without Lloyd's, there would be a gap in the market, some insurance would become unavailable and the prices of the rest would. rise. He is concerned because the American funds of Lloyd's show a shortfall of $6.1 billion and. interference with the restructuring "would be devastating".

Whatever the justice of members' claims against Lloyd's they should not be able to prejudice the integrity of the funds, Mr Atchinson's court submission concludes. Mr Sandler echoed this by saying rejection of the reorganisation "brings the disaster scenario into play". "This package is final," he added, as Lloyd's has said about previous packages.

Daily Telegraph: Hiscox £54.6m rights issue for acquisition

HISCOX Dedicated Insurance Fund is to launch a £54 6m rights issue to pay for its purchase of Economic Insurance and to buy out the whole of Hiscox Holdings.

The l-for-1 rights issue at 115p a share aims to raise £54 6m. Just over £30m of this will be used to pay for Economic Insurance, with £33m being used to pay for the 75pc of Hiscox holdings that it does not currently own.

Hiscox Dedicated, which is the only Lloyd's of London fund that exclusively provides capital to a single managing agency, said that after the acquisition of the remainder of the Hiscox Holdings, it will be renamed Hiscox Plc.

Times: Names call for Lloyd's pension

LLOYD'S OF LONDON is under pressure to provide its hardest hit names with an annual "pension" as part of its multi-billion settlement offer to 34,000 names.

The call for further help is driven by concerns that thousands of names will be financially ruined if they accept the insurance market's settlement offer.

Lloyd's is in the process of a radical restructuring plan, involving names paying a fee to offload all their future liabilities as well as losing their Lloyd's deposits. For an estimated 6,000 names the bill they will receive from Lloyd's will leave them with little or no assets and they will have little remaining income. As a result Lloyd's has offered £200 million of extra assistance.

However, this so-called tranche 4 of debt credits will not resolve many names} problems. In thousands of cases their Lloyd's deposits are in the form of bank guarantees against their homes and the loss of their Lloyd's deposits would in normal circumstances mean the loss of their homes.

In a bid to overcome this Lloyd's is offering names the chance to take out a special mortgage, but this still leaves names with the problem of how to fund the: interest payments.

In a letter to names Michael Deeny,. chairman of the Gooda Walker Action Group, wrote: "This is a particularly. hard fate for elderly names who face an old age of penury and deprivation."

As a result, Lloyd's is being lobbied hard by numerous names' representatives; including the Association of Lloyd's Members and the Feltrim Names Association and Gooda Walker Action Group, to provide an annual income to ruined names.

Damon de Laszlo, chairman of the Feltrim Names Association, said: "there are many names who have borrowed to pay their losses and will be left with these debts after, they settlement offer. They need financial help."

The idea is that ruined names will- receive regular cash payments that provide a minimum reasonable standard of living. Under the now defunct Hardship programme, Lloyd's own bankruptcy scheme, a couple were entitled to £17,500 a year after the payment of major outgoings, such as mortgage payments.

Lloyd's yesterday said it was in favour of the idea but was concerned about the potential cost and how to fund the payments.

Action group chairmen are urging names to apply for the tranche 4 debt credits so Lloyd's can use the applications to assess the magnitude of the income support needed. Mr Deeny said: "Such income support would be means tested and would only be available to those who. have supplied the information required in the past by the Hardship Committee or that required for tranche 4 applications."

So far more than 3,800 names have applied for tranche. 4 debt credits but about 2,500 who Lloyd's believes are eligible for assistance have failed to apply. The lack of response is thought to be due to the deep mistrust in which Lloyd's is held by many names. Some members of the society are wary about revealing financial details in case Lloyd's uses the information against them if the settlement offer founders. Lloyd's has tried to reassure names that the information is for the sole purpose. of the settlement process

Lloyd's intends to send out fresh indicative statements to names at the end of June, followed in early July by final statements which will detail how much each name has to pay Lloyd's. But it is unlikely that names will vote on whether to accept the offer at the market's annual meeting on July 15. Instead the 34-odd action groups will hold extraordinary meetings as soon as is practicable after the final statements are sent to names. It is after these meetings, in mid to late July, that names are expected to make their individual vote on whether to accept the offer.

Daily Telegraph: Stricken names call for Lloyd's pension

The Australian: Names petition ASC in Lloyds battle

Lloyds of London Australian Names have asked the Australian Securities Commission to intervene in their contracted fight to avoid paying an estimated £300 million ($million) owed to the struggling insurer.

In a new strategy revealed yesterday, the Lloyds Australian Names Enquiry Group, representing 35 investors, has asked the ASC to apply to the courts to prevent Lloyds from recovering the money. The group claims Lloyds syndicates contravened prospectus requirements when attracting Australian investors in the 1980s.

More than 800 Australians are listed as names - investors in the Lloyd's insurance market - but it is unclear how many are still active or have an outstanding liability.

ASC intervention could also prevent Lloyds from bringing any action against names in Australian courts or enforcing judgments made in British courts.

The group is buoyed by recent action by US regulators in nine States, which have launched legal proceedings accusing Lloyds of securities fraud.

Last month, the Federal Securities and Exchange Commission also ruled that 600 names were entitled to pursue a damages class action against Lloyd's.

Evening Standard: Running high risks in the long tail game

The world's insurance community as a business specialising in risk is used to all manner of claims on the policies it provides. One class of business always causes it to hold its breath.

In the markets it is described as "long tail" liability business.

It is an innocent enough expression for a class of risk that has threatened to bring down Lloyd's of London and caused countless problems within the international insurance community.

In spite of its reputation as a freewheeling financial circle, the insurance industry likes certainty. Huge risks are insured. But equally a price for premiums is set at an appropriate level which assumes that some sort of pay-out in claims will have to be made in the near term.

The fundamentals of long tail liability business are different.

The final result is unknown when an insurer takes on a risk in the shape of insuring a company and its management against the financial consequences of suits for damages brought by employees who have suffered industrial injury.

Many of the potential claims take years to emerge and are dependent on the whim of the courts.

The eventual awards that might be made against the company with an insurance policy could be much larger than expected.

The company providing that policy will have little idea of what its eventual exposure might be.

This sounds commercial madness on the part of the insurer.

However, this type of business has considerable attractions. It provides immediate premium income on a book of business where claims could take years to materialise.

In the meantime, insurers can generate significant investment income on the premium flowing to them.

This is known as "cash flow" underwriting and usually comes into favour when the competition stiffens.

Obviously, it is attractive while claims are not filed. When they are it poses a nightmare.

Insurers might be able to absorb one-off "catastrophe" risks in the shape of a disaster, such as claims from a large fire or shipping accident, but they dread a run of smaller claims that lasts for years.

Between 1940 and 1970 Lloyd's specialised in insuring and reinsuring liability risks of American companies.

When the lung disease asbestosis surfaced, Lloyd's, along with other insurance groups, was swamped by a huge volume of claims.

Reliable assumptions on the possible financial extent of the problem could not be established because of the capriciousness of the court awards mechanism in the US.

In spite of that, some of Lloyd's professionals saw an opportunity to make some money out of the mounting problem. They stepped in and provided reinsurance protection for others within the Lloyd's community who were seeking to unload their long tail liability risks.

The flood of claims caught up with them, too, leaving them as insurers of last resort in a worse financial position than those they had sought to protect.

Some experts at Lloyd's argue that Equitas should approach long tail liability claims with a new attitude and set a fresh approach for dealing with the problematic issue.

They say that original policy wordings should be observed which could reduce the amount of money that is eventually paid out to those insured.

Lloyd's has offered very favourable terms to its clients so it can hold on to important accounts.

Experts argue that policyholders should be encouraged to pursue the original underwriters for claims rather than other underwriters, such as Names at Lloyd's, who subsequently took over the risks in the form of reinsurance contracts in the past half a century.

Whatever happens, the enthusiasm for business which carries immediate premium income and claims beyond the horizon is likely to remain undimmed in spite of the near-disastrous consequences of the past few years.

Evening Standard: Big five insurers come alive again

Daily Telegraph: Wellington to change status

Lloyd's of London investment group Wellington Underwriting is to convert itself into an insurance company writing more than £700m of premiums, making it the biggest corporate player in London's £10bn insurance market, as Lime Street's Big Bang gathers pace.

Wellington's move, which hinges on the Lloyd's recovery plan going through follows a restructuring at another Lloyd's group, Hiscox, whose Hiscox Dedicated Insurance Fund is taking over the group's managing agency, to form a £500m insurance company within Lloyd's. The change has been on Wellington's agenda since the investment group was floated 18 months ago.

With overseas companies controlling much of Lloyd's management and investment funds holding nearly a third of its capacity, capital providers will increasingly seek direct control of underwriting agencies. Those investment trusts which have not already planned moves are under intense pressure to do so. But Wellington, which recently revealed a £100m underwriting profit, will not copy other groups, Murray Lawrence, Bankside and Kiln, by merging its syndicates. Wellington boasts it has no bad performers to submerge with the good.

Another structural Lloyd's change, the auctioning of syndicate capacity, is forcing members' agents to alter their charges. This week, Murray Lawrence will announce it will waive profit commission unless its members enjoy above-average returns - it will then take half the difference. Christie Brockbank is moving to a wholly fee-based system.

New Central Fund Byelaw passed

• to provide policyholder protection for all liabilities other than those reinsured into Equitas; and
• to accommodate the reconstruction and renewal proposals and, in particular, the rules for refunding the 1995 members' special contributions.

The new Central Fund will comprise an opening balance of at least £100 million, transferring from the existing Central Fund, and reserve funds of £200 million, which are available to be called from members as and when required.

Subject to agreement at the class meeting, be held at the Royal Festival Hall on 15 July, the members' special contribution will be charged on the 1993, 1994 and 1995 years at l.5 per cent of capacity (this figure will be slightly higher for certain categories of corporate members).

Where applicable, acceptance of the settlement offer and payment of finality bills will enable all members, both underwriting and resigned, to quality for a full refund of these contributions, beginning in 1997. Refunds will largely extend over seven years, depending on future underwriting capacity. Names who die before the contribution becomes payable will not bear the levy.

PR Newswire Association, Inc.: NEW STUDY CONCLUDES SKY WILL NOT FALL IF LLOYD'S OF LONDON IS FORCED TO COMPLY WITH STATE SECURITIES LAWS

British Insurance Company Represents Only 1. 73 Percent of U.S. Property and

According to the study, Lloyd's total premium income of $14. 3 billion in 1994 represented only 2. 7 percent of the $530 billion world-wide property and casualty insurance market. In the United States, Lloyd's total share is a paltry 1. 73 percent.

Commissioned by the Utah Division of Securities and sponsored by NASAA, the report was written by Robert L. Westin, a noted expert with over 40 years of experience in the insurance business and the author of over 70 professional articles. Westin has been professionally affiliated with Lloyd's in the past, including as a senior executive of Penn General Agencies, Inc., where he was involved in the management of a small Lloyd's approved London brokerage. He visited Lloyd's London office on at least four occasions to discuss the management of the brokerage, arrange underwriting authority, and transact business on the floor of Lloyd's.

Of the largest insurance companies surveyed by Westin, only the Travelers Group felt its connections with Lloyd's was significant enough to mention in its 1995 annual report. Travelers stated that it "does not believe that any uncollectible amounts of reinsurance recoverables would be material to its results of operations, financial condition or liquidity." Smaller companies arc also unlikely to be significantly affected. Moreover, insurance guarantee funds would also protect against losses.

The report explains that Lloyd's is seeking approximately $7. 5 billion to fund an attempted recapitalisation of its insurance operations through the creation of a new entity called "Equitas" that would assume responsibility for claims on policies prior to 1993. Existing investors are to provide $1. 95 billion of this amount. Since only about ten percent of Lloyd's investors are U.S. residents, the effect on Lloyd's and Equitas will be minimal if those persons do not contribute additional money.

"The report demonstrates that if U.S. investors never pay another cent, the Equitas fund will fall $114. 4 million short of the $7. 5 billion - a shortfall of only 1. 5 percent, says Griffin.

In March 1996, NASAA President Dee R. Harris formed the NASAA Lloyd's Co-ordinating Committee to gather information, serve as a central information repository for actions filed by 11 states against Lloyd's, and negotiate with the British concern in the hopes of reaching adjust settlement of outstanding disputes. State actions are based upon allegations that the recruitment of approximately 3,000 American investors by Lloyd's was conducted in violation of state securities laws.

On Thursday, June 6, at 11.00 a.m., Philip A. Feigin, NASAA Lloyd's Co-ordinating Committee Chairman and Colorado Securities Commissioner will address leaders of the American Names Association and the Association of Lloyd's State Chairman at a meeting at The Plan Hotel in New York. He will talk about current negotiations with Lloyd's and clarify NASAA's position in light of Lloyd's campaign of disinformation. The media is invited to attend.

PR Newswire Association, Inc.: LLOYD'S OF LONDON ISSUES A RESPONSE TO NASAA STUDY

Sydney Morning Herald: ‘Name' takes Part 10 route from Lloyd's

At least one Lloyd's of London Australian "Name", or investor, has chosen the route of a voluntary arrangement under Part 10 of the Bankruptcy Act rather than deal with the uncertainty of what her total liability for accumulated past losses will be and the financial uncertainty that this entails.

Launceston Name Mrs Mills was facing an outstanding claim estimated at $1 million from past losses incurred by her Lloyd's syndicate.

Mrs Mills, who became a Name in 1987 and put $400,000 of her assets on the line to become a member of Lloyd's, had applied for hardship relief from Lloyd's but was refused. Her only other option, according to her insolvency trustee Mr Max Prentice, was to go bankrupt.

Mr Prentice instead advised her to consider entering into an arrangement with her creditors.

Lloyd's failed formally to detail its calculations which quantified its debt, a requirement for voting purposes. It also sent a faxed proxy form voting against the proposed settlement. Faxed proxies, Mr Prentice pointed out, are invalid pursuant to Australian case law and he rejected it as chairman of the meeting.

Neither Lloyd's nor its Australian representatives attended the meeting and the settlement was voted into force by the six creditors present, representing a little under $370,000 in claims.

Mr Prentice said Mrs Mills had tried unsuccessfully for five years to establish her exact liability.

Daily Telegraph: Auditors of Barings face £470m claim

TWO accountancy firms which audited Barings Futures Singapore, where Nick Leeson acted as general manager, are being sued by liquidators for alleged negligence.

Barings Futures Singapore went into liquidation last year with debts of more than £800m after it emerged that Mr Leeson had falsely reported his trading positions for three years. He is now serving a prison sentence in Singapore.

Price Waterhouse has filed a lawsuit at Singapore's High Court which seeks more than $1 billion (£470m) from Deloitte & Touche and Coopers & I.ybrand.

Deloitte & Touche acted as auditors for Barings Futures in 1992 and 1993, while Coopers & I.ybrand performed the audit in 1994. Both firms are also being sued in London by the administrators of Barings Bank.

The lawsuit claims that both auditors failed to detect an account, numbered 88888, in which Mr Leeson concealed his trading losses. The account was established just after he arrived in Singapore in April 1992.

It is not yet clear, however, who will receive the funds if Price Waterhouse is successful in its action.

One insider said: "There will be a separate court hearing at which that will be decided. Barings Futures Singapore had a complicated status in the inter-company balance sheet and it is not clear who is entitled to what."

Chew Kia Ngee, chairman of Coopers & Lybrand Singapore, said: "We are confident that our work as external auditors was properly tarried our and we intend to vigorously defend any claims against us."

Deloitte & Touche said it was "completely satisfied that the audits... were conducted with all requisite professional skill and care."

Sunday Telegraph: Lloyd's rescue costs plunge

The cost of the Lloyd's rescue plan has plunged from £1-9bn to £200m according to figures circulated to market professions last week.

Hard-pressed Lloyd's Names will rejoice at the news of the fall, which should cut the amount of cash they need to contribute to the market's reconstruction plans. The fall in the cost of setting up Equitas, the vehicle for handling old claims at Lloyd's, calls into question the accuracy of the figures in the market's rescue plan.

News of the plunge in the cost was released by Lloyd's chief executive Ron Sandler to managing agents. He told agents the cost of providing for Equitas, over and above the £13bn found by transferring reserves from syndicates, is now put at £700m. But Lloyd's and the Department of Trade and Industry say this includes a £500m "cushion" required by the DTI before it would authorise Equitas.

Equitas, the Lloyd's company set up to meet claims under policies written before 1993, is essential to "ring fence" new entrants into the £10bn Lloyd's market, in particular corporate backers, from old liabilities.

There remains other costs to be borne however, including the £1-3bn settlement of Names' lawsuits. The Cameron-Webb syndicates will need £400m. Personal stop-loss and estate protection policies could cost £100m.

Evening Standard: Lloyd's may break rescue deadline

Lloyd's of London has warned that it may not be able to prove it is solvent by the Department of Trade's 31 August deadline, meaning that it may be forced to stop trading.

The beleaguered insurance market blamed administrative problems with its complex rescue plan for the delay in obtaining sufficient funds.

Observers said Lloyd's has approached the DTI to ask for an extension, arguing that it deserves leniency because the rescue plan is almost certain to receive support from its members, the Names. This follows recent improvements to a £3.1 billion settlement offer designed to induce them to accept.

Lloyd's claims it has been hit by unexpected delays in preparing statements for each of its 34,000 Names, telling them how much they must pay to participate in the rescue plan. As a result, Names are unlikely to receive their final bills before the second week in August, a fortnight later than Lloyd's is still publicly promising. This leaves little margin for error if cheques are to be received and cleared by the end-of-month deadline.

"Whereas with a company doing a £14 billion reconstruction, you could accept some level of error in the figures so long as they weren't materially inaccurate. In the case of Lloyd's all the numbers have to be right because the effect of errors which seem small overall can be dramatic for individual Names," said an observer.

Lloyd's chairman David Rowland is unlikely to want much publicity given to any deadline extension the market receives. Ever since the current rescue plan was devised last year, Lloyd's has said the deal has to be in place by the end of August.

Observers say Lloyd's fears that if Names action groups discover that the solvency date is negotiable, this will encourage them to continue renegotiating the terms of the rescue plan. The market has been warning Names that the settlement is now final because time has run out.

Financial Times: Limit in talks with agencies

Limit, the largest corporate investor in Lloyd's of London, disclosed yesterday it was in discussions about acquiring minority or majority stakes in a number of agencies which run syndicates at the insurance market on: behalf of capital providers.

The move is likely to accelerate the transformation taking place at Lloyd's.

Managing" agencies, which oversee the underwriting, are increasingly joining forces with those who supply capital to their syndicates. This is creating nascent insurance companies - or "integrated vehicles" - trading under the Lloyd's umbrella.

Mr. Jonathan Agnew, chairman, said Limit would remain a "mixed animal" continuing to supply :capital direct to a wide spread of syndicates. But its push to buy shares in agencies reflected the increased difficulty it expected in obtaining free places direct on the best performing syndicates.

Possible partners for Limit -might include the Bankside, Hiscox and Wellington managing agencies. Mr. Agnew refused to detail what discussions were taking place but he expected Limit to invest in "quite a number".

Other agencies have already found new shareholders including large Bermudian and US insurers.

Mr. Agnew's comments came as Limit unveiled results for the year to March 31 which showed pre-tax profits up from £10.8m to £13m. The figures included only investment income. Underwriting profits from 1994, when Limit joined Lloyd's, will not feed through until 1997 under the market's system of reporting three years in arrears.

However, Limit said it expected a return on "capacity" the amount of business it was allowed to underwrite - of more than 9 per cent in 1994. This is before taking account of a proposed special levy imposed by Lloyd's as part of the market's recovery plan. Return on capital would be roughly double the return on capacity.

For 1995, Limit "tentatively" anticipates a return on capacity of about 7 per cent.

This year, Limit has the capacity to underwrite business generating £610m in insurance premiums spread across 95 syndicates.

Financial Times: Brockbank almost trebles

Shares in Brockbank, the Aim-listed Lloyd's agency, leapt 65p to 498p yesterday after it announced a tripling of profits generated by syndicates it managed in 1993. Lloyd's reports results three years in arrears, writes Ralph Atkins.

The figures are likely to feed through into substantially higher commission income for Brockbank, which last year agreed a deal with Mid Ocean under which the Bermudian reinsurer would acquire a 51 per cent controlling stake in an enlarged Brockbank group.

Syndicates 861, 588 and 253 produced total profits of £74-1m, compared with £25.7m

in 1992. The syndicate 861 result included business provided in the first year of Admiral, the telephone-based motor insurer.

Financial Times: Lloyd's chief says £3-1bn offer is final

Efforts to secure the financial future of Lloyd's of London moved into their final stage yesterday when the insurance market warned that no further changes were possible to an £3-1bn out-of-court settlement offer. It also said that about 175 "blacklisted" Names would have their benefits from the settlement restricted.

Mr. Ron Sandler, Lloyd's chief executive, said it had to meet deadlines - most importantly the August 31 solvency test imposed by government regulators. ‘There is no further scope for changes in the settlement structure," he said.

Separately, Mr. David Rowland, Lloyd's chairman, outlined to an Association of Lloyd's Members conference how the Names "blacklist" had been compiled from those working at the market who caused losses totalling more than £8bn in recent years.

The list includes underwriters, and directors and partners of Lloyd's agencies. However Lloyd's risked provoking Names' anger by refusing to publish the list for legal reasons.

The latest developments come as the market prepares to send to Names next week revised figures on the individual impact of the market's recovery plan. Names are individuals whose assets have traditionally supported Lloyd's.

Highlighting the growing support for the plan, Mr. Michael Deeny, the chairman of the Gooda Walker Action Group which represents some of the worst-hit Names, told the ALM conference: "The war has gone on long enough, it is time to make peace."

Mr. Sandler warned that further feuding could worsen problems in the US where legal action pending could undermine Lloyd's recovery plan, of which the £3-1bn offer is a part. His remarks were an obvious rebuff to hard-line Names who this week called an extraordinary general meeting to press for substantial improvements .

"I'm worried that the continuing evidence of disputes and dissent will give them [litigating US Names] the confidence that their efforts to make life difficult . . . are the right thing," Mr. Sandler said.

As well as the £3-1bn offer, the recovery plan includes proposals for a giant reinsurance company, Equitas, which would take responsibility for billions of pounds of mainly US asbestos and pollution liabilities.

In the past few months the cost of Equitas to Names has fallen from £1-9bn to about £900m. The settlement offer has also increased from £2-8bn to £3-1bn.

Illustrating the improvements available, the Wellington agency, which runs syndicates at Lloyd's, published figures showing an additional £266m could be released to Names from 1992 and prior years of account because of lower-than-expected Equitas costs. Those benefiting include Names litigating over their losses.

Names on five Lloyd's syndicates are being offered cash for their places by one of the insurance market's new generation of corporate investors, Cox Insurance, Ralph Atkins writes.

In an unprecedented move at the insurance market, Cox announced yesterday that it would pay up to 18p per pound of underwriting "capacity" - the amount of insurance business that can be accepted.

The move is intended to encourage Names who might resign this year to take an early decision, allowing plans to be made for the 1997 underwriting year.

As well as being a corporate investor, Cox also owns a managing agency responsible for running Lloyd's syndicates. It wants to purchase £50m in capacity at a cost of £3.1m.

Corporate investors, trading with limited liability, are increasingly replacing traditional Names who put at risk the full extent of their assets.

The Times: Lloyd's cuts Names out of settlement

Lloyd's of London is punishing 172 market professionals for contributing to the £8 billion of losses that hit the market. They will have their share of the settlement offer cut.

The "blacklists of working names covers a string of high-profile underwriters and directors and partners of managing and members agencies and is believed to include a former chairman and deputy chairman of Lloyd's.

Yesterday David Rowland, the chairman of Lloyd's, told nearly 800 names gathered at a conference in London that 172 names who were entitled to £32 million of debt credits would now only receive about £14 million. This represents a 56 per cent cut in the names entitlement.

Under the terms of the £3.1 billion settlement plan, Lloyd's is writing off £2 billion worth of names' debts.

Lloyd's has not revealed the identities of the blacklisted working names, but has disclosed the criteria for their selection. These principles for selection suggest that the list might include high-ranking professionals such as Stephen Merrett, a former deputy chairman of Lloyd's and chairman of the Merrett managing agency. All the names have the chance to appeal against the blacklisting.

Other names likely to appear are Tony Gooda, the former chairman of Gooda & Partners, the Lloyd's agency that advised more than 250 names. Mr Gooda's names are among the hardest hit in the insurance market as a result of their involvement in the loss-making Gooda Walker syndicates.

The underwriters of these syndicates, Stan Andrews, Anthony Willard and Derek Walker, are also likely to be on the list. So is Patrick Fagan, underwriter of a Feltrim syndicate. Similarly, Robin Kingsley, chairman of the Lime Street Agency, which placed names on the loss- making Feltrim and Gooda Walker syndicates, is a possible name on the list. Overall, there are 33 former active underwriters who have had their debt credits cut by an amount equal to the average loss incurred by the average member on their syndicate. These underwriters are those whose syndicates have lost more than 100 per cent o f capacity and are subject of litigation or have been the centre of critical- loss review. Virtually all the Lloyd's loss reviews into the background of a syndicate's losses have been critical. The underwriters are not the only ones to be penalised for the syndicate's losses as Lloyd's has decided that directors or partners of the managing agency are to be subjected to the same cut in debt credits. This throws up 131 names. A further 62 working names on the blacklist are directors or partners of members' agencies where the average loss of names was more than 50 per cent in any of the years between 1988 and 1992. The balance comprises of two names who owe debts to Lloyd's and seven names who have been found guilty of serious disciplinary offences.

Earlier in the day, Ron Sandier, chief executive of Lloyd's, had told names at the

Association of Lloyd's Members' conference that there would be no more changes to the settlement offer, in spite of continued lobbying. "The timetable we have does not allow for any change of almost any type," he said.

He added that negotiations with managing agents to increase their contribution to the settlement package from £200 million were in their final stages. The agents are believed to be close to agreeing to inject a further £50 million.

• A Lloyd's insurer has stolen the march on the insurance market's capacity auctions with an offer to buy £50 million of capacity from investors at up to ten times last years prices. Cox Insurance said the move was designed to secure capacity for next year by September, when it believes 20 to 30 per cent of names could leave the market after the implementation of Lloyd's recovery plan. The company estimates that names leaving its syndicates could be leaving a £30 million - £50 million hole in its £260 million capacity.

The Times: Lloyd's goes name drop

JUSTICE comes in many forms and in the case of the Lloyd's of London insurance market it took the manifestation of a blacklist yesterday.

Lloyd's names are on the brink of deciding whether to accept a £3.1 billion settlement offer from those who run the insurance market. Many names will be grudge accepting the offer because they believe that it lets many of the market's miscreants off the hook.

Justice - and in some cases revenge —- is something thousands of names hold dear to their hearts. They have been subjected to five long years of financial torment, largely, they believe because of the negligence if not fraud of a mass of market professionals .