LLOYD'S of London yesterday said enough investors had accepted its £3.2 billion sterling settlement offer for it to go through, taking the insurance market one step closer to sealing its recovery plan.
Lloyd's said that by Thursday night 31,246 members, the Names, or 91 per cent of total membership worldwide, had accepted the offer and the acceptance deadline had been extended to noon London time on Wednesday September 11th.
The statement was the strongest indication yet from the 300-year-old market that its recovery plan would be successful. Other conditions still need to be met before the entire package can go ahead, including British government approval.
"We're not quite at the destination yet. .. the key step is now possible to take, but there are two other steps to be taken," Lloyd's chairman Mr David Rowland told a news conference.
The settlement offer, which had been raised to £3.2 billion from £2.8 billion three months ago, is designed to soften the cost to investors of setting up the reinsurance vehicle Equitas and ending litigation. Some Names had sued, claiming they were negligently exposed to ruinous unlimited risk.
The market, which started out as Edward Lloyd's coffee house, was struck a potentially-devastating blow by massive insurance losses from hurricanes and asbestos.
However, there was still disgruntlement among some hard-up Names over the privations suffered as a result of the insurance market racking up billions of pounds of losses since the 1980s.
The Lloyd's Names Associations Working Party complained that members had yet to receive formal confirmation that in some cases Lloyd's would foot their final bills and in others they would receive income and housing help.
The British government is likely to decide next week whether to approve the recovery plan and the solvency of Lloyd's. The success of the settlement offer is crucial to this decision.
Under its recovery proposals, Lloyd's aims to reinsure billions of pounds in liabilities into a new company, Equitas. It must look at the financial package and say whether it finds it acceptable, which it is expected to do shortly.
The Department of Trade and Industry also has to approve the recovery plan.
The DTI said the British Trade and Industry minister Mr Anthony Nelson would announce his decision when he was satisfied that the criteria have been fulfilled".
Lloyd's sent a letter yesterday from its chief executive Mr Ron Sandler to Names who have not yet accepted the offer, encouraging them to do so and reminding them of the consequences if the recovery plan fails.
Lloyd's expects the acceptance level to rise to the mid to high-90s (per cent) once the September 11th deadline expires.
A special auction for departing Names who wish to sell off their capacity on Lloyd's syndicates is to be held on September 12th and the market expects around 10 per cent of Names active this year to resign.
Lloyd's said 4,200 Names had in- plied for a fourth tranche of debt credits made available under the settlement offer to the hardest hit, Around 1,600 of these were not eligible, while 1,700 have received their allocations and another 900 qualify for the support scheme.
