R. WAYNE KLEIN #3819
Assistant Attorney General
JAN GRAHAM #1231
Utah Attorney General
160 East 300 South, 5th Floor
Salt Lake City, UT 84114
Telephone: (801) 366-0310
Facsimile: (801) 366-0315
Attorneys for Plaintiff
IN THE THIRD JUDICIAL DISTRICT COURT,
IN AND FOR SALT LAKE COUNTY, STATE OF UTAH
THE STATE OF UTAH,
Division of Securities of the Department of Commerce,
LLOYD'S, a.k.a LLOYD'S OF LONDON, a corporation,
a.k a. COUNCIL OF LLOYD'S,
a.k.a. COMMITTEE OF LLOYD'S,
a.k.a. THESOCIETY OF LLOYD'S,
a.k.a THE CORPORATION OF LLOYD'S,
and its agents and representatives;
CASE NO. 960902920CV
AFFIDAVIT OF ROGER WALTER SLEIGH BRADLEY
JUDGE: Glenn K. Iwasaki
I, ROGER WALTER SLEIGH BRADLEY, make oath and say as follows:
- I, Roger Walter Sleigh Bradley of 45 Hillcrest Road,
Purley, Surrey CR8 2JF am a retired Lloyd's Underwriter with a
background of 41 years of my working life spent in the insurance
industry, 26 of which were spent at Lloyd's.
- I first went to Lloyd's in 1957 when I joined Lloyd's as
the third man in the E H W Hayward box. In October 1962, I was appointed
Marine Underwriter with NEMGIA Limited. Later, in October 1967, I was
invited by Peter Green to join him as an underwriter with Janson Green
- I stayed at Janson Green until October 1977 when I was
invited by Mr. Bryan P. Barrie to be his equal partner and active joint
underwriter in Bryan P. Barrie Underwriting Agencies Limited. In January
1980, I continued being the active underwriter on syndicate 921 R W S
Bradley and others. In November 1986 I retired from active underwriting.
I retired as a Director of Bradley Gascoine Underwriting Agencies
Limited in December 1988.
B. The Asbestos Problem
I. Conversation with Ralph Rokeby-Johnson
- During my time at Lloyd's, I began to become aware of
the potential dangers to the Lloyd's market posed by asbestos liability
claims in the United States. Whilst I had been aware from the late 1960s
that claims were being made in the United States in respect of asbestos
risks, it was not until 1973 that I became aware in general terms of the
possible scale of such claims and the potentially devastating effect
which they could have on the Lloyd's market, where many of these risks
were insured and reinsured.
- On 4th October 1973, I played in the Lloyd's Golf Club
Autumn meeting at Walton Heath. My opponent was Ralph Rokeby-Johnson, a
leading Non-Marine Underwriter with the Sturge Agency. Ralph
Rokeby-Johnson asked me during the course of the match the following
question: "Has Green got all his reinsurance for asbestosis in place and
has he got enough of it? Has he got it placed offshore?"
- The Green referred to was of course Peter Green for
whose Syndicate, Janson Green, I had been underwriting for 6 years at
the time. I was surprised by this question and gave a fairly
non-committal response which was that Peter Green seemed relaxed. Later
on, Ralph Rokeby-Johnson asked me if he had upset me. I said that he had
not and asked him to tell me more.
- It was at this point that Ralph Rokeby-Johnson spoke to
me in the terms which I shall never forget which were as follows: "What
I can tell you, my friend, is that asbestosis is going to change the
wealth of nations. Lloyd's will probably be bankrupted in the final
chapter unless something happens to intervene, i.e. the Government via
the Bank of England or legal duress on the Americans, but it will happen
and we cannot stop it." Ralph Rokeby-Johnson spoke of possible claims of
$66 billion by 1990 and $120 billion by the year 2000. These figures
have now been confirmed as being the same figures as those in the
Selikoff Report of 1964, the first of two reports by Dr. Irving Selikoff
of the Mount Sinai School of Medicine in New York into the problems
caused by exposure to asbestos. Clearly, Ralph Rokeby-Johnson was well
aware of this report. I, however, like the vast majority of
Underwriters, had not and still have not seen that Report. After the
golf match at Walton Heath, at drinks, I approached Ralph Rokeby-Johnson
because I was now intrigued with the situation he had revealed.
Essentially, I asked him: "How do you know your estimates are on
targets?" Ralph Rokeby-Johnson was irritated at this: "I don't know; it
is only a judgment. Six billion dollars or $66 billion, it all depends
on asbestos in buildings and how many time bombs there are". "What are
time bombs?" I asked. With a pained expression, because of my background
as a "mariner" underwriter floundering in "non-mariner" country, he
explained: "Time bombs are victims walking, sleeping, talking, who are
living but have lung cancer. When they die, as they will do up to the
year A.D. 2000, the lawyers are going to have a field day. We don't know
how many are affected. They don't know yet. So pick a figure, but it
won't be far off, I have told you".
- What Ralph Rokeby-Johnson knew was that the policies
written by Lloyd's in respect of American liability risks since the
1950s were largely unlimited i.e. they had no aggregate exposure limits
and apparently contained no exclusion clauses in respect of asbestos
related diseases. A huge number of claims were being made in the US
courts against asbestos manufacturers under their public liability
policies and these claims would sooner or later burst through onto the
- I spoke to Bill Maitland, fellow Underwriter at Janson
Green, the next day about my conversation with Ralph Rokeby-Johnson on
the golf course. He disappeared for a few hours and then came back. He
told me that if I were asked about asbestos, I should refer the matter
to Peter Green, who later became Deputy Chairman of Lloyd's and
subsequently Chairman. He had clearly spoken to Peter Green and told me
not to worry and that the situation was being closely watched.
- It was 1975 and after when claims advised by Sedgwicks in relation
to a US company called Bell Asbestos started to hit the London Market.
Even then, however, the vast majority of the market were unaware of the
size of the asbestos problem.
II. Visit to New York
- In September 1979 I was fortunate to be selected as one of twelve
invitees, underwriters, brokers and Corporation of Lloyd's staff, to
visit New York insurance market under the auspices of the Keith Brown
- It was a memorable visit which I found to be of a great personal
benefit in understanding the operation of the interplay between the
marine and non-marine market.
- This was also a significant period for Lloyd's in general and the
asbestos problem in particular. In 1978 Lloyd's had decided to relocate
service departments to Gun Wharf at Chatham and to redevelop the 1928
building. Clearly the scene was being set for a massive increase in the
number of Names and an increased volume of business to be written, the
reason for which I now believe to be, at least in part, the knowledge by
those at the very top of the Lloyd's hierarchy that the scale of the
asbestos problem was such that it could affect the market unless new
Names were drafted in to help "mop up" the losses.
- Also in 1978, there loomed from America a potential disaster
scenario of asbestos liability springing from various US Courts where
cases were being filed and judgments given. In particular, judgment was
given in the case of INA -v- Forty-Eight Insulators Inc. which held that
liability in relation to asbestos risks arises on an exposure basis. In
the same year, the cases of Eagle Picher Inc -v - Liberty Mutual
Insurance Co. which eventually held in favor of the manifestation theory
and Keene Corporation -v- INA which decided that the insured could
collect on both an exposure and manifestation basis i.e. the "tripple
trigger" were filed. The latter judgment could cause Lloyd's insolvency
- In April 1978, an article on asbestos exposure by J. A. Califano
jnr, Secretary of Health, Education and Welfare of the United States
reported that 67,000 people each year would die from exposure to
asbestos products during the rest of the 20th Century. The article
stated that it was known that between 8,000,000 and 11,000,000 workers
had been exposed to asbestos in the United States since the beginning of
World War II and of this group 4.5M had worked with asbestos-contained
insulation materials in shipyards. Most of the shipyard workers had been
exposed to asbestos and it was estimated by the United States Government
that one third of all those heavily exposed to asbestos had died or were
likely to die of asbestos-related diseases. The US Government also
instructed the US Surgeon-General to send an advisory letter to all
400,000 physicians in the USA describing the health risk posed by
- This report was, I believe, picked up by LeBoeuf Lamb Leiby &
MacRae, Lloyd's US attorneys, and passed to Lloyd's via the Lloyd's
Underwriters Non-Marine Association, a powerful market association whose
members included the major Non-Marine Underwriters of the time It was
never published. Bearing in mind that Doctor Irving Selikoff of the
Mount Sinai School of Medicine in New York, an expert on the subject of
asbestos, in 1964 stated that asbestos-induced diseases and cancers took
upwards of 40 years to manifest themselves, the outlook for Lloyd's in
1978 was grim.
- At the same time, many adverse reports on asbestos liability claims
produced in the United States were surfacing but being suppressed from
market consumption. Quite clearly underwriters were realising their
reserves both offshore and onshore to pass solvency on their 1979
accounts. In reality, their reserves were gone and the Central Guarantee
Fund was almost naked.
- It was against this background that I left for New York in September
1979. I was well aware of the depressing underwriting scenario evident
to all but I wanted to find out for myself the possible ravages of
asbestos which I recognised as "packaged fog" and needed to search for
answers to my doubts and ignorance.
- I had resigned from Janson Green in 1977 and, suspecting that they,
one day, were going to have problems with latent disease and pollution
claims, I wanted to make sure that any Non-Marine liability business
that I wrote for the relatively new Bryan Barrie syndicates, namely 901
and 921 were as free as possible from such unwelcome claims. Ralph
Rokeby-Johnson's asbestos warning of 4th October 1973 to me, at Walton
Heath Golf Club, was still fresh in my memory.
- It was at a committee meeting of the Keith Brown Foundation, when I
and the other committee members were discussing the impending visit to
New York that it was decided that each of the 12 visitors sent to New
York would choose a subject before leaving and write a report on it on
return to London.
- I remember that Alan Parry was in the Chair and others present were
Charles Skey and Stephen Merrett together with Phil Johnson from the
Corporation staff as Secretary. It was agreed that I should be in the
party to go.
- When I was asked what the subject of my research was to be, I stated
that my subject should really be Nuclear Insurance but that what I
should prefer to do would be to delve into the asbestos scenario and
possibly the pollution aspect as well.
- The reaction from Charles Skey, a senior underwriter and Lloyd's
Committee member, was electric: "Oh for heavens sake don't do that
please", he said. "We know all about asbestos. Whatever you do don't go
stirring up the Americans on that one. Leave it well alone". I was
surprised at this outburst and replied, "OK, I'll make it Nuclear
Insurance". "That's better", said Charles Skey.
- After the meeting I remarked to Alan Parry, "My gosh, I certainly
upset Charles didn't I?" Alan laughed and replied that it was after all
a sensitive issue. However my mind was made up. Asbestos it was to be,
even if softly softly.
- A few days later before setting out, Peter Green gave us a small
sending off party, to wish us God speed, on the second floor. He came up
to me and said he was glad I was going, no doubt impishly, bearing in
mind that in all the ten years that I had worked for him in the Box he
had never sent me once to the USA although I had been handling US
business every day.
- I mentioned to him that I was going to do a report on Nuclear
Insurance. He smiled and said nothing and then I said I was going to
delve very quietly into the asbestos scenario. He paused for thought,
studied me and remarked that that would be "interesting no doubt" and
then moved down the line of us.
- During my visit, we were all given a choice to spend a day with
anyone we liked. I chose to spend the day at Citibank. Tom Hitchcock,
the Manager, introduced me to Philippe A Humbert, Vice President, and
Nicholas A Jones of the Senior Accountant's office. I spent a
fascinating day with them, discussing US banking for Lloyd's.
- After meeting Tom Hitchcock in the offices of Citibank I had dinner
with him. We discussed the level of claims that were likely to be
received by Lloyd's in view of asbestos liabilities. Hitchcock knew, and
I knew, that in the future very substantial claims indeed would be
received by Lloyd's. I had been speaking to insurance underwriters and
brokers earlier in the week. They told me that asbestos claims were
likely to be of such a magnitude that the claims would be horrific.
- We had no idea of the cost of claims to Lloyd's. We were not able to
calculate the amount at that stage. The number of claims seemed to be
growing, was very large and appeared to be without limit. It was quite
impossible at that stage to forecast the number of claims that would be
made in respect of asbestos damage. The amount of each claim had been
calculated within a certain range. The crucial question was the number
of claims that would be made that would be fed through to the Lloyd's
market. This was not known to us.
- We were speaking in general terms, Underwriter to Banker. We were
both concerned in relation to the number and amount of claims that would
be received. Hitchcock said to me that, if every claim known to be out
there as a liability for Lloyd's were to be delivered and became payable
the next day, there simply would not be sufficient money in the Lloyd's
American Trust Fund ("LATF") to meet all liabilities.
- Hitchcock said, and I accepted and agreed, that the claims that had
been incurred, but were not reported or presented to Lloyd's would
inevitably be received over a period of time. It was simply a question
of time. Hitchcock said that he was aware that there were insufficient
funds to meet all claims in total on one day if presented together. That
would not, of course, happen in the real world. Hitchcock therefore
suggested and I agreed with him that the only way out of the crisis for
Lloyd's would be for Lloyd's to try to increase its capital base by
recruiting more Names. We were after all getting a new and much larger
Lloyd's and therefore needed more Names to justify and pay for it.
- We attempted to work some figures out, on the back of a napkin. We
knew that there were approximately 17,300 Names at Lloyd's in 1979 and
that did not appear to be anywhere near enough to provide capital
sufficient to meet the asbestos claims.
- We tried to work out the sort of capital requirement that Lloyd's
should aim to achieve in coming years. We did some calculations based on
the average line that a new Name would write and the amount of deposit
that would have to be made. At the time, there was no minimum liability
per Name but the maximum liability that a Name could take by way of
premium income was £350,000. The average would be somewhere in between.
At that time, it was necessary to deposit one fifth of the premium
income limit written in any one year with Lloyd's.
- It was the deposits made in respect of writings that would provide
capital to Lloyd's, or even the doubling up of existing premium levels
of members of Lloyd's to increase underwriting capacity.
- We also thought about the amount of money deposited in the LATF.
This fund comprised cash in US and Canadian dollars and some
investments, in aggregate of about $4 billion. The proportion of the
LATF in the US$ was, I believe, some $2.93 billion.
- This seemed to Hitchcock to be woefully inadequate. We were talking
in terms of possibly trebling the amount deposited in LATF to a figure
of US $12 billion, or even more if possible.
- We tried to calculate the number of Names that would have to be
recruited to Lloyd's to make sufficient deposits to provide the
additional capital needed to increase the deposit in the LATF. We did
not calculate precisely the number of Names that Lloyd's should seek to
recruit. Nonetheless, it was plain to Hitchcock and to me that Lloyd's
would have to look for many many more Names. We talked in terms of
25,000, 50,000 or possibly even 100,000 as a goal. I jokingly added
"what about even 250,000?" He laughed and replied "Yes, why not?"
- This conversation came back to me years later when I read a copy of
the speech delivered by Robert Kiln, a senior Lloyd's Committee member
throughout most of the 1970s, delivered at a City Financial Conference
in early 1981. In this speech, Mr. Kiln stated that Lloyd's might well
have 50,000 members by the 1990s. At the time of the speech, Lloyd's had
only 19,089 Names. To many people, the suggestion that Lloyd's would
more than double in size in 10 years would have seemed highly unlikely
but not to Bob Kiln. I believe that Bob Kiln, like other senior Lloyd's
personnel, must have been well aware of the scale of the asbestos
problem and the consequent urgent need to attract new Names when he gave
his speech in 1981.
- Mr. Hitchcock and I had a very serious conversation relating to
Lloyd's US operations and solvency that went on, not only in the
evening, but in the day time with his two brilliant assistants. I learnt
more about Lloyd's financial operations in America than on any previous
visit to New York.
- On the flight home I became sad to realise that, in order to find
out what was going on in US insurance circles, there was no way, other
than going there physically, that I, in my position as an ordinary
underwriter, could find out.
- I then realised, with irritation, what a tremendous advantage the
"Seniors" at Lloyd's enjoyed with their syndicate paid for visits, how
they could acquire knowledge and then keep it to themselves. It is the
deputy underwriters and the Names (external especially) who suffered.
- Because I did not realise what was going on, namely the suppression
of Attorneys' Reports from the US by Lloyd's "Centre" and because I
believed the successive Chairman of Lloyd's speeches delivered at
Lloyd's AGMs at which no mention of asbestos pollution was made, I
thought that, notwithstanding the size of the problem, everything was
- I never "reported" back to Peter Green on my "asbestos" findings but
I knew that there was no need to do so since, as Deputy Chairman of
Lloyd's, and subsequently Chairman, he would have been well informed of
the situation. I did, however, mention what I had found out about the
huge impending asbestos liabilities which would soon be cascading into
the Lloyd's market to a few people, including Murray Lawrence, later
Deputy Chairman of Lloyd's, and Ralph Rokeby-Johnson. They listened very
quietly to all I had to say but did not really comment. Ralph
Rokeby-Johnson did however tell me that there was already an unofficial
asbestos working party looking into the asbestos problem. This later
became an official Asbestos Working Party in August 1980.
C. Closing of the 1979 Year of Account
- A few years after, in 1982, I was the joint Underwriter of Bryan
Barrie Underwriting Agencies Limited. Bryan Barrie and I wished to leave
the 1979 year of account open as we considered that the losses would
exceed premium income, but that we would show a profit in 1980, (which
we did) and make up for it. We were a new Syndicate and hence had
- Our Finance Director at Bryan Barrie Underwriting Agencies Limited
was Peter Dixon. I told Peter that Barrie and I proposed to leave the
1979 year of account open. Bryan Barrie and I had done our calculations
and had decided that the 1979 year should be left open.
- Peter Dixon said to me "I have been talking to your old mucker,
Peter Green" who had said, "Peter try to get Bryan and Roger to close
their 1979 year of account". Dixon said, "So you Roger must close it,
you have been recommended to by Green, your old boss".
- As a consequence, against our better judgment, we thought that we
should do as the Chairman of Lloyd's recommended. Consequently we closed
the 1979 year of account, although we did not believe that we had
sufficient reserves to do so, and so called upon the Names to pay the
- I subsequently felt very let down in June 1982 when I learnt that
Peter Dixon left the 1979 year open on other Syndicates that I was on,
namely Syndicates 918 and 157, being the non-marine Syndicates of the
PCW Group, for which he was also the Finance Director. It seemed one law
for 901 and 921 and another for 918 and 157, pragmatic purposes to rule
before equality considerations to the same Name, as I was involved in
- Evidence now to hand, elsewhere, does more than suggest that the
1979 year of account had to be closed to secure the safe passage of the
new Lloyd's Bill in July 1982, and that certain "knowledgeable" senior
underwriters used unlimited run offs place at Lloyd's to assist them in
passing solvency, all syndicate reserves having been seriously depleted
by previous years adverse trading.
- Again, it is quite clear that the "Seniors" at Lloyd's used their
position to benefit their own syndicates. The rue-off policies placed by
the "Seniors" were effected largely to off-load asbestos liabilities.
Many of the Seniors who placed unlimited run-off policies were on the
Committee of Lloyd's or on the Asbestos Working Party, the formal body
set up in August 1980, to co-ordinate Underwriters' response to the US
asbestos liability problem and to provide the market with information,
such body replacing the informal asbestos working party which Ralph
Rokeby-Johnson had referred to on my return from New York in September
- Many of these Seniors such as Charles Skey, Ralph Rokeby-Johnson,
Murray Lawrence and Don Tayler were underwriters on syndicates which had
huge asbestos liabilities. Whilst I and no doubt others were recommended
to close our 1979 year of account, the "Seniors" off-loaded the
liabilities of their own syndicates via the run-off contracts which they
placed onto underwriters who were not privy to the information which
they themselves had.
- In this way, liabilities in respect of syndicates which had closed
their 1979 year of account when they should not have done so were passed
on to future Names which should not have been so passed, just as the
Seniors themselves passed on their own liabilities via the run-off
contracts which they placed. I believe that this was done to postpone
the "coming home to roost" of the huge problems which Lloyd's faced,
many of them asbestos-related, in order to ensure that the Lloyd's Act
1982 was passed.
I confirm that this statement is true to the best of my knowledge and
ROGER WALTER SLEIGH BRADLEY
Sworn before me at this 29 day of July 1996
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