Lloyd’s has decided not to proceed with part of its overall reform plans which called for a buy out of the remaining 2500 or so individual Names who pledge their capital to support its syndicates.
The idea was strongly opposed by the Names themselves and, according to some reports, by the managing general agents who would have had to come up with a large portion of the buyout funds. Lloyd’s had already announced that it would review the proposal (See IJ Website May 9)
The idea had been part of Lloyd’s reform proposals, which include a change to annualized accounting, an end to the 300-year-old practice of reforming its underwriting syndicates each year and the adoption of a franchise type of system. With corporate investments now providing over 80 percent of Lloyd’s capitalization, the retention of individual unlimited liability investors was viewed as being increasingly incompatible.
However, the adoption of the other reforms requires the consent of a majority of Lloyd’s members, who currently number around 14,000. With only around 900 representing the corporate interests the support of the individual Names, who retain membership and voting rights even if they aren’t currently investors, is crucial to the passage of the proposals.
According to a report from Reuters News Agency, Lloyd’s Chairman Sax Riley announced the decision at a conference of the Names. However he also indicated that no new unlimited liability investors would be accepted, and that Lloyd’s would continue to explore other possibilities to slowly reduce the number of Names.
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