Newspaper article The Evening Standard (London, England)

Self-Destruct Danger in Fight over Lloyd's Shake-Up; City Comment

Newspaper article The Evening Standard (London, England)

Self-Destruct Danger in Fight over Lloyd's Shake-Up; City Comment

Article excerpt


SAX RILEY is a man in a hurry who is about to find the traffic lights turn red against him.

He is chairman of the Lloyd's of London insurance market and though he never sought the job and agreed initially to do it for only 12 months, he has used the time well to craft a far-reaching reform plan. Now, with a few months of his term left and a younger wife with whom he would like to spend more time, he is pressing to get his plan agreed so that he can leave on a high with the market firmly on the path of change and modernisation and his job well done.

But the best-laid plans can come unstuck.

In two weeks' time those involved in Lloyd's vote on a resolution which will allow the ruling council to press ahead with the plan. While such a vote is not strictly necessary within Lloyd's constitution, Riley pressed for it because he saw it as a public demonstration that everyone is on side and backing the move for change.

But this weekend he heard rather more backfire than backing.

Michael Deeny, chairman of the Association of Lloyd's Members, the most significant organisation representing the individuals who still provide capital for the market, has written to his constituents and recommended a vote against blanket endorsement of the Riley plan.

In a memorable mixed metaphor he describes the resolution as "a blank cheque to approve a curate's egg".

The independent Names who used to provide all the market's capital but now represent under a quarter of it are not against all that is suggested but, crucially, they feel threatened by certain key proposals. They feel the plan tilts the balance of power in Lloyd's towards corporate capital - that provided by shareholders of insurance companies. They worry that their protections will be eroded when the regulatory board is not replaced, that their ownership of the market might be diluted or destroyed when a new Lloyd's Act is pushed through Parliament. …

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