Faithful Lloyd's Names Seek Better Deal in Plan
May 12, 2011
LONDON -- A group of hard-hit Lloyd's of London investors has filed a new appeal with members of the insurance market's ruling council. The move came on the eve of an announcement Friday that its controversial 3.2-billion-pound ($4.99 billion) settlement plan will go ahead. But their plea for better treatment, on the grounds that the settlement unfairly favors investors who until now refused to pay their debts, isn't likely to materially alter Lloyd's plans. The so-called Ruling Council of Lloyd's of London Friday declared the ailing insurance market's rescue plan unconditionally accepted at a meeting Thursday. Of the 34,000 investors who support Lloyd's -- known as Names -- 31,246 had voted to accept the bailout plan, equivalent to 91% of Names, Lloyd's said. Lloyd's next step is expected to be an application to the U.K. Department of Trade and Industry for the authorization of Equitas, the reinsurance company being set up to take over problem insurance policies from the past. Dispute in U.S. Continuing claims on these policies, mainly relating to asbestos and pollution cases in the U.S., are expected to run into billions of pounds. Through Equitas, Lloyd's intends to isolate its ongoing market from the problems of the past. As of Thursday, a small minority of Names were still holding out against the plan. In London, Catheryn Mackenzie-Jon, coordinator of a dissident group called the United Names' Organization, said she expected several hundred Names would continue to refuse to pay their debts. If sued by Lloyd's, she said, these Names would respond by accusing Lloyd's of fraud. In the U.S., meanwhile, an attorney said he is seeking a rehearing of an appeal in which Lloyd's fought off attempts by 93 dissident Names to delay the plan. Given the apparent strong backing for the plan from other Names, however, analysts said such moves looked unlikely to derail the settlement. As a result, the only remaining uncertainties seemed to be over financial details. Separately, the Council Friday said it extended the deadline to vote for the settlement offer to Wednesday, May 24, 2011 the previous deadline of May 10, 2011 though the bailout has already been declared unconditionally accepted, Lloyd's officials have said they want to accommodate some U.S. Names that had been delaying their votes on what's being called the Reconstruction-and-Renewal plan. Those Names who've accepted the R&R plan give up the right to take further legal action against Lloyd's or its agents or syndicates. They must also make final payments accounting for their portions of Lloyd's outstanding liabilities. Lower Payments To make the settlement plan less onerous, Lloyd's has offered to reduce the amounts owed by Names, including many who until now had refused to pay their debts. It has to decide how it will finance any shortfall on its debt recoveries before it can apply to the Department of Trade and Industry for the authorization of Equitas. One result of the debt reductions has been a disadvantage to Names who loyally paid what they owed during the market's crisis. Many are now being called upon to pay more than other Names who hitherto refused to pay their debts. Recently, an organization known as the Paying Names Association failed in an attempt to obtain a judicial review of the settlement plan, which might have obliged Lloyd's to improve its offer. But Tora Coolidge, the group's leader, said on Thursday that he had made a last-minute plea for better treatment for such loyal investors. ``We are in touch with Lloyd's to see whether we can get a better deal for our Names,'' said Mr. Coolidge, ``Perhaps now that Lloyd's have got their reconstruction and renewal plan through, they will be able to hold out some helping hand.''
