Lloyd’s and the National Association of Insurance Commissioners have reportedly reached a compromise on the deposit Lloyd’s must make to the reinsurance trust fund to guarantee payments of its estimated claims liabilities – 60 percent of the amount will be paid by Nov. 15, and the remainder by the end of March 2002.
According to a report in London’s Financial Times, the accord was reached last night, after the NAIC had withdrawn its original agreement that Lloyd’s would only be required to put up the called for 60 percent immediately. (See IJ Website Oct. 25). It’s expected that Lloyd’s would issue another cash call in January, with the money being received in February and available for payment by the March deadline. Cash calls are normally made on a quarterly basis.
The new date for the remaining 35 percent to be deposited in the fund, not only gives Lloyd’s time to raise the required amount, but also gives the NAIC time to complete its audit of Lloyd’s loss liabilities and reinsurance coverage to more closely assess the exact amounts involved.
It’s unlikely, however, that the required deposit, which currently totals around £3.75 billion ($5.35 billion) will be reduced. The figure represents approximately 70 percent of Lloyd’s estimated $7.7 billion gross loss estimate from the attacks on the World Trade Center, but the additional time will ease the liquidity pressures on a number of Lloyd’s syndicates, and give them time to recoup some losses from rising premiums.
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