Vulture Fund's Threat
to Sue Lloyd's Names over Asbestos Arouses Anger
Nov. 10--An American "vulture
fund" is targeting Equitas -- the company set up to handle old claims for
the Lloyd's of London insurance market -- by attempting to scare asbestosis sufferers
into selling their claims against the UK operator.
Bermuda-based G-Risk also has an
audacious plan to sue some of the most high-profile investors, or Names, at Lloyd's
if it fails to extract enough money from Equitas.
G-Risk is offering to buy individual and
company insurance claims at a discount. Asbestosis sufferers, who could wait
for years for a settlement from Equitas, are frequently willing to sell their
claims in return for immediate payouts.
G-Risk is attempting to secure more
business by predicting that Equitas is almost certain to collapse into
bankruptcy within the next two years. If that happened, claimants are likely to
receive only a fraction of the money they were seeking.
The rate of asbestosis claims has
accelerated in recent years, raising doubts over the long-term financial
position of Equitas, whose accountants refuse each year to give it a clean bill
of health. But one Equitas executive attacked G-Risk's approach. "These
are not crack financial analysts,' he said. "They do not have any inside
knowledge of our figures.
"They are simply trying to drive
down the market in the hope that when they encourage people to sell a $1
million policy for the knock-down price of $150,000, they will make a big
profit."
G-Risk, set up in January last year, said
it used a network of global buyers and sellers of insurance that could give
insured people tax benefits and an early exit route and also offered insurers
"significant benefits."
Sources in the US insurance market
suggest that G-Risk plans to combine thousands of asbestosis claims to take
action against Equitas. If Equitas runs out of funds, G-Risk intends to pursue
the claims against the Lloyd's investors who originally underwrote the risks.
This could run to several thousand individuals for every claim.
But G-Risk plans to target high-profile
investors, such as members of the Royal family, who would be keen to settle a
lawsuit rather than being dragged through the courts. Prince Michael of Kent,
for example, is known to be a Lloyd's investor.
The Equitas executive said: "They
are trying to cash in on our misfortune and financial uncertainty.
"Worse, they are trying to scare
some genuine asbestosis sufferers out of money that could be theirs.
"Claimants should seek good legal advice rather than selling up."