Lloyd's to fight court ruling in names' favour
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Your support makes all the difference.Lloyd's of London suffered a setback to its hopes of cruising to a smooth settlement following an important test case legal victory for names yesterday. The insurance society said immediately it would appeal, expecting that its ambitious rescue plan will have been accepted by a majority of names before the final judgment.
Richard Scott, the vice-chancellor, ruled in the High Court that Lloyd's was wrong to have changed its rules to enable it to capture all money won by names in litigation and force it to be used to pay off losses.
Under the so-called Premium Trust Deeds amendment of spring last year, all the proceeds won by litigating names has been frozen in solicitors' accounts pending clarification of the law.
Alan Porter, a names' action group chairman, said: "This is good news for ruined names, who have been struggling to get some cash out of their previous favourable judgments."
Expressing "mild surprise" at the ruling, Lloyd's said it would fight. "This is such an important matter of law that we intend to have it clarified for all time, if necessary by going to the House of Lords," a spokesman said.
At stake is about pounds 300m, which Lloyd's has factored in to its calculations for its reconstruction and renewal programme, whereby all the old policies, including the heavily loss-making asbestos and pollution liabilities, are being put into a separate re-insurance company called Equitas. Names are being asked to pay a final individual premium into Equitas to cover all their potential liabilities, so enabling them to draw a line under their affairs at Lloyd's.
During the last few months, Lloyd's has been frantically seeking, with increasing success, to raise money from within the market to reduce the cost of Equitas to names, so increasing the chances of the final settlement winning approval. Moderate names groups had sought to put off the legal hearing for fear it would complicate the last stages of the settlement.
While hard-line names yesterday celebrated the court ruling as a serious obstacle to the settlement, moderates said it would in the end make little difference as it was unlikely to produce more money.
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