Newspaper article The Christian Science Monitor

Lloyd's of London's Offer to Investors Not Widely Accepted

Newspaper article The Christian Science Monitor

Lloyd's of London's Offer to Investors Not Widely Accepted

Article excerpt

THE board of Lloyd's of London's hope that 21,000 investors will accept an offer totaling 900 million British bounds ($1.3 billion) as compensation for huge losses in the last three years seems likely to be dashed.

The world-renowned insurance underwriter made the offer on Dec. 6 in the hope that the investors, known as Names, would prefer to have their losses partially covered, rather than seek compensation through litigation in the courts.

Initial reaction to the settlement package has been mostly negative. By Dec. 12, only a small number of Names had said they would accept the offer. Most likely, Lloyd's will face years of litigation brought on by aggrieved Names determined to get their money back, a senior City of London broker says.

The problems facing Lloyd's appeared to deepen Dec. 10 when Chatset, a leading financial research company here, forecast that Names may face losses totaling a further 8 billion British pounds in the next few years from pollution, asbestos, and natural disaster claims.

Last June, David Rowland, chairman of Lloyd's, reported losses of 2.9 British pounds billion for the 1990 accounting year, bringing total losses for the last three years to nearly 6 billion British pounds.

If the Chatset forecasts prove correct, Lloyd's will have to ask Names for more heavy payments at a time when many of them plan to sue to recover lost money. A case involving 3,000 Names is set to go to court next April and others are already scheduled for later in the year. If most of the 36 action groups representing aggrieved Names reject the offer, dozens of separate court actions will likely be triggered.

Peter Middleton, Lloyd's chief executive, says 900 British pounds billion is the best possible offer. "We have stretched the society's {Lloyd's} resources as far as we could," he says.

Mr. Middleton concedes that under the compensation package most investors would receive less than 100,000 British poinds.

The package proposes a sliding scale, with Names belonging to the worst-performing Lloyd's syndicates - groups underwriting a package of insurance risks - getting 66 pence on the pound, but the majority receiving less than 40 pence on the pound. …

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