Investors who lost millions in the Lloyd’s of London insurance market are gearing up for another legal fight to get their money back.
Many of them were bankrupted in the early Nineties because of massive asbestos losses and inadequate accounting systems at the 300-year-old market. They have secured a Court of Appeal hearing on June 6 to apply for a retrial.
In the late Nineties and early 2000s, the investors, known as Names, went to court to try to prove that the market knew in the early Eighties about the scale of the asbestos and accounting problems it faced, but that it continued to recruit new investors.
They were defeated in a final Court of Appeal judgment in 2002 and since then Lloyd’s has continued to sue the Names wealthy individuals who pledged their entire fortunes to cover market losses.
But now the Names, under the guise of the United Names Organisation, say they have new documentary evidence that shows senior Lloyd’s executives knew about the asbestos threat and accounting defects much earlier than claimed. They have also obtained a 250-page testimony from Stephen Merrett, the former deputy chairman of Lloyd’s who resigned in 1993, regarding alleged malpractices during the Eighties.
It is understood that the new evidence was unwittingly released by Equitas, a company set up by Lloyd’s in 1996 to handle past liabilities and to allow the market to continue in business.
This, say the Names, demonstrates Lloyd’s culpability early on.
Christopher Stockwell, chairman of the group of Lloyd’s Names who is leading the legal action, said: ‘It’s clear that the Court of Appeal misdirected itself about the global accounts and that needs correction.
‘There’s plenty of evidence to show that Lloyd’s committee members knew about the problems.’
Lloyd’s and Equitas refused to comment. But most organisations and associations involved with the market were dismissive of the legal move, with one criticising the Names involved for being ‘embittered’ and for ‘going over old ground’.