Syndicate's plight referred to 'loss review' department after action group complains
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Your support makes all the difference.MARKET authorities have launched a top-level investigation into accounting matters at Lloyd's insurance syndicate 745, which is making losses of about pounds 130m.
The syndicate's members include the estate of the late racing driver James Hunt and the MPs Sir Nicholas Lyell, Tristan Garel-Jones, James Arbuthnot, Henry Bellignham, Anthony Steen, David Tredinnick and Neil Thorne as well as Lord Bethell and Lord Denham.
Following an appeal by the professional insurance broker Edward Benfield, who is heading an action group representing up to 1,750 members of the syndicate, Lloyd's head of regulation, Brian Garraway, has referred the matters to the market's influential 'loss review' department.
The City lawyers Denton Hall, acting for Mr Benfield's action group, have demanded an inquiry into a possible serious miscalculation of estimates of the syndicate's profitability or losses in the 1989 and 1990 trading years.
Mr Garraway has told Denton Hall: 'As you may know, the above syndicate (745) has not yet formally triggered a loss review but, in anticipation of that, we are already doing some background research so that the process is not unduly delayed.'
Mr Benfield has questioned the reserving policy of the syndicate before it declared losses of up to pounds 132m. Under Lloyd's rules, before a large loss review can be carried out members of an individual syndicate have to stand to lose 100 per cent of their investment. So far on syndicate 745 that rule has not been triggered.
Syndicate 745 lurched into crisis late last year and in October David King, the professional underwriter acting for the syndicate, was sacked by the agency managers, KPH Underwriting Agencies.
Mr King left the group when it became clear that the losses of pounds 132.5m had arisen because of larger-than-expected payouts on insurance claims arising from European storm damage in 1990. In the previous account syndicate 745 had reported losses of pounds 20m.
The syndicate comprises about 400 professionals working at Lloyd's and about 1,300 private investors.
Mr Benfield is seeking financial help for the members, who have been asked to provide cash from their own resources to meet insurance claims.
In the 1990 underwriting account James Hunt may have lost around pounds 60,000 from his involvement with syndicate 745.
Mr Benfield has called on the Lloyd's authorities to open the books for the previous trading account of 745 - for 1989 - and order a fresh audit into the results for that period.
If Lloyd's agreed to Mr Benfield's request it could lead to a demand for new auditing standards in the market and create a potentially disruptive precedent for existing financial procedures.
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