Lloyd’s Names were warned that they would receive cash calls in the next few days from the syndicates in which they participate asking for additional deposits averaging between £42,000 and £50,000 ($60,000 to $72,000) to cover the payments of claims related to the terrorist attacks of September 11.
The calls, which will be made to both individual names and corporate investors, will raise around £780 million ($1.12 billion) which will be used primarily to increase the trust funds held in the U.S. to assure claims payments. Lloyd’s recently arranged to deposit only 60 percent of its anticipated reinsurance claims liabilities, rather than the 100 percent, which is usually required. (See IJ Website Oct. 16)
Most of Lloyd’s 2800 individual Names will be affected, but their contributions will be only about a third of the total being raised. corporate capital providers, mainly insurance companies, which provide about 85 percent of Lloyd’s capacity, will be asked to provide around around £535 million ($770 million). The amounts owed must be paid within four weeks.
The cash call had been anticipated, and was actually somewhat less than had been expected, but it may not be the last one the Names will receive. Most analysts now agree than Lloyd’s estimated net loss figure of £1.3 billion ($1.9 billion) is too low, and will eventually have to be raised.
At a meeting Tuesday night arranged by Michael Deeny, the Chairman of the Association of Lloyd’s Members, the Names were reassured by Nick Prettejohn, Lloyd’s CEO and its Finance Director Andrew Moss that although the losses were large, they were manageable. They were also told that predicted premium increases, some by as much as 300 percent, would lift the entire Lloyd’s market beginning next year.
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