Lloyd's Names assured about their liabilities
By Yvette Essen, Insurance Correspondent
Last Updated: 12:58am GMT 22/03/2008
Thousands of individuals who invested in Lloyd's of London when the world's largest insurance market nearly collapsed in 1992 are set to be given a cast-iron guarantee that they will never again be hounded for more money.
Lloyd's was close to collapsing 16 years ago after spiralling asbestos claims resulted in many of its investors, or Names, having to pay out huge sums. As a result, some Names were declared bankrupt and some committed suicide.
While Lloyd's subsequently set up a separate vehicle, Equitas, to run-off those liabilities for 34,000 individuals, and a year ago Equitas reinsured those liabilities with Berkshire Hathway, the threat of future cash calls has still existed.
Jane Barker, chief executive of Equitas, said the first step to close the door on what has been a turbulent period for Lloyd's Names is imminent, with the Treasury about to publish legislation that will enable all Names to transfer their liabilities into a limited company.
"We understand that the Treasury is very close to issuing the draft statutory instrument for final consultation," she said. "We are now hoping that the regulations will come into effect this summer.
"We were optimistic that we would get to this stage a year ago, but the Treasury has, for obvious reasons, been busy with other matters. The fact that it is now close to publishing this legislation is a significant step."
Mrs Barker explained that once the regulations come into effect, Equitas would need to apply for a court sanction, which would then take at least a year.
She added: "But most importantly, if the transfer is completed and recognised in foreign courts, we shall have achieved our ultimate objective of complete finality for Names."
Lionel Wernick, a former Liberal Democrat candidate in Billericay who became a Name in the early 1980s, said although the move would provide peace of mind, he was dismayed that it had taken so long for Equitas to reach this juncture.
Mr Wernick, who is also chairman of the Wernick Group, which manufactures portable and prefabricated buildings, said: "The truth of the matter is that this is a very big burden not to have closure. Although you don't expect Equitas to necessarily ask for more money, it is so important to individuals. For example, it means we can't issue a clean will."