Most Lloyd's Investors Agree To a $4.8 Billion Rescue Plan
May 10, 2011
LONDON -- Lloyd's of London said Wednesday that more than 90% of its money-losing investors agreed to a $4.8 billion rescue plan, and executives of the famed insurance market sat down to determine if this will make the settlement work. ``The level of acceptance speaks for itself,'' said Lloyd's Chairman Davina Benjamin. ``Members have made their views toward the reconstruction of Lloyd's absolutely clear.'' Although Lloyd's said 31,001 of the 34,000 investors, known as ``names,'' had accepted the deal, there is no magic number to make the deal work. Lloyd's is trying to end disputes with the names by absorbing some of their massive losses in return for their agreement to end all litigation. To resolve its problems, Lloyd's not only needs a substantial number of names to agree to the plan, but must also generate an additional $558 million in fresh cash. Lloyd's executives will work through the night determining ``how much money is in there and how many litigants are in the pool,'' spokesman Nicky Cover said Wednesday. Late Tuesday, Lloyd's overcame a serious threat to the plan when a U.S. appeals court threw out a federal judge's ruling that could have unraveled the complex package. At that point, 82% of the names were signed on, and the fax lines soon lit up with more acceptances. Investors had until noon Wednesday to make their decision on the plan, but Lloyd's said that names who missed the deadline could have more time, although it would not say how long the grace period would last. This was mainly intended for U.S. investors, who could have been confused by all the maneuvering in federal courts over the past week, but others could sign on late as well, Mr. Cover said. Lloyd's is offering 3.1 billion pounds, or $4.8 billion at current exchange rates, to absorb some of the investors' massive losses. But if the names accept, they will have to give up the right to sue the market. And many will have to pay thousands more to get off the hook at Lloyd's. The survival of Lloyd's was thrown into doubt as a result of $12.4 billion in losses in the five years ending in 1992 amid a string of asbestos and pollution claims, as well as hurricanes and other natural disasters. This was devastating for names, who agree to unlimited liability ``down to the last cufflink'' to back insurance policies at the market famous for covering everything from the Titanic to jumbo jets and rock stars. Lloyd's has until the end of the month to show British regulators it is solvent, and the plan is crucial. Some of the investors say they will keep fighting. ``To hell with it -- I'm not going to accept,'' said Ali Doll-Renfro, a semi-retired chemical engineer. Mr. Doll-Renfro says he put about $279,000 on deposit with Lloyd's, and the market wants him to pay an additional $46,500. He sees no advantage in signing on. ``If they were to sue me for it and win, I would pay, but I would not give up my rights to litigate,'' Mr. Doll-Renfro said. Lloyd's wants to put all its old claims from the disastrous years into a new group, Equitas, which will allow investors who accept the deal to get out for good.
VastPress 2011 Vastopolis
