Lloyd's new delay on rescue bodes well for names
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Your support makes all the difference.The ruling council of Lloyd's of London is expected today to accept another delay in the tight timetable of its rescue plan in the expectation of offering improved financial terms to hard-hit names.
The final statements on the individual amount that names will have to pay Lloyd's to draw a line under their affairs at the insurance market are now expected to be sent out in late June, several weeks later than planned.
Lloyd's is increasingly confident that broad-based support is growing for the rescue plan among the majority of the 34,000 names, and that a further delay to finalise better conditions will clinch the deal.
Lloyd's is seeking to cut loose from its disastrous loss-making past by transferring its pre-1993 policies into a special re-insurance vehicle, Equitas. Most of the capitalisation for Equitas will come from Lloyd's reserves, but the balance will be made up by final contributions from names. These Equitas premiums have until now been calculated as totalling pounds 1.9bn, shared among names according to their liabilities. Now, in negotiations with the Department of Trade and Industry, Lloyd's is hoping to reduce the amount to below pounds 1.5bn.
In addition to this expected reduction in the premiums, Lloyd's is privately confident of raising at least another pounds 300m from market professionals, auditors and possibly a bank loan, to top up its pot of pounds 2.8bn to be used for offsetting the cost to names of Equitas. Combining the two would mean an improvement of more than pounds 500m in the settlement terms, and a significant improvement in the deal offered to names with the heaviest losses, who tend to be among those at the forefront of litigation against the society.
Under the earlier settlement calculations, Lloyd's offered to cap the Equitas premium of the several thousand hardest-hit names at pounds 100,000. An increase of the settlement offer terms by around pounds 500m would enable Lloyd's to halve that cap to pounds 50,000, a key litigating names' demand, and channel more funds to the worst-off.
The new timetable to be discussed by the Council is also to consider the postponement ofthe society's annual meeting of 15 June, when names will vote on the rescue plan.
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