pounds 100m Lloyd's boost for names' fund
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Lloyd's of London, the beleaguered insurance market, looks set to increase the pounds 2.8bn settlement it has offered to loss-making and litigating names, by raising a further pounds 100m from brokers towards the package.
Hopes were also high among some names yesterday that a further sum of up to pounds 300m might be available through a lower-than-expected costing of the Equitas plan, the re-insurance agency being set up to shoulder all liabilities for business underwritten up to 1992.
If the pounds 1.9bn cost of Equitas were to be reduced, it could substantially cut the pounds 100,000 cap placed on names' potential additional contributions to the agency.
However, a Lloyd's spokesman said yesterday: "We have always said that the Equitas premium would be pounds 1.9bn while the Department of Trade and Industry believes that it will be at least pounds 1.5bn.
"There has been no detailed discussions with the DTI on the exact amount. There are some final number-crunching exercises to be done, which are taking place at present, but we can't do anything until the full DTI team is back and we discuss the matter with them."
Final bills for Equitas, which will cover the worst loss-making years and the potentially huge payouts from asbestos and pollution-related claims in the US, are expected at the end of May.
The deal with brokers, expected to be announced in the next few weeks, will fall short of the amount expected by many names, who are having to foot the bill of more than pounds 8bn in losses in the past five years.
Market sources said yesterday that any higher amount, which has to come out of future years' profits, would seriously affect the viability of the business.
Brokers are themselves expressing doubts about the precedent involved in subsidising the market's previous losses, although they are ready to invest to keep the business alive.
Under the terms of the agreement being hammered out with brokers, they would would be expected to contribute sums in proportion to the premiums they bring to the market.
The deal, likely to run for several years, could allow Lloyd's to juggle funds and add to the settlement package names must vote on at Lloyd's annual meeting in July.
Issues still to be fully resolved include guarantees against further litigation. As part of the settlement within Lloyd's reconstruction and renewal proposals, names are expected to drop lawsuits.
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