No Fraud Found in Lloyd’s Recruitment of Investors

July 31, 2002

A London appeals court reportedly dismissed allegations of fraud against Lloyd’s insurance market, which had been charged by dissatisfied members, or Names, with deceiving them into investing in Lloyd’s underwriting syndicates. According to A.M. Best, however, the court did find misrepresentation in the recruitment documents used to solicit the Names’ investments.

A legal fight is expected to continue as the Court of Appeal returned the case to a lower court and left an opening for the Names to seek damages on their claims of misrepresentation.

The court reportedly found fault with a statement in the recruitment materials that keeps Lloyd’s exposed to claims of negligent misrepresentation. The statement allegedly said the market had a system of audits that enabled it to make reasonable estimates of known and unknown losses and the court found the declaration to be untrue.

Lloyd’s is calling for the Names to settle the case, which dates to 1996.

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