LLOYD'S of London is still having to battle against a riptide of anger from thousands of investors who face bankruptcy because of massive losses by the world-renowned insurance underwriters.
The latest protests have been sparked by news that 26,000 investors (Names) owe an average of 70,000 ($105,560) British pounds each because of 2 billion British pounds lost by Lloyd's in 1991 under its unlimited liability rules. This brings losses since 1988 to more than 7 billion. British pounds Lloyd's publishes its accounts three years in arrears.
The 1991 losses stem from catastrophes, such as Hurricane Bob in the United States, a hailstorm in Calgary, Alberta, and Typhoon Mireille in Japan. The earlier major claim list is long and expensive including the Exxon Valdez tanker spill.
At a Names annual meeting May 24, chairman David Rowland heard complaints from many loss-makers who could not meet the cash calls being made on them. He said: ``We force no one into bankruptcy, but we do insist that members pay their debts where resources exist.'' One Name said, ``What that means is that you want us to sell everything we own to pay for past mistakes by Lloyd's.''
Lloyd's refuses to publish details about its investors, but it is believed up to 50 Conservatives in Parliament are among the loss-makers. Sir Edward Heath, the former prime minister, is one MP facing bills of several thousand pounds. Another owes 1.5 million. British pounds If the MPs are forced to file for bankruptcy, they may have to resign their seats.
Announcing the 1991 losses on May 17, Mr. Rowland said they were ``very serious.'' He argued that 1991 losses were about 1.7 billion, British pounds because some insurance syndicates had made overlapping accounting claims against reserves. He said there were ``modest'' losses in 1992 - of about 1 billion British pounds Rowland said Lloyd's was likely to post a profit for 1993.
Despite his efforts to smooth ruffled feathers, bitterness is widespread. Christopher Stockwell, chairman of the Names Association, which represents members, accuses Lloyd's of ``misleading and conning'' small investors to put their money into syndicates in the 1980s. He predicts more Names will quit the organization. Since 1990, membership has fallen from more than 28,000 to 17,000. A statement by the Names Association said: ``The kind of sums now being demanded are usually only obtained with a mask, a gun, and a getaway car.''
Many who have quit Lloyd's are suing. They are represented by 36 action groups. One case, involving 3,000 Names from one insurance syndicate, is now before the courts.
Many aggrieved Names are complaining that their syndicates were poorly managed and allowed huge losses to pile up without looking after the interests of individual investors.
A group of Names has published newspaper ads drawing attention to its members' plight. One ad claimed that ``at least 30 suicides and premature deaths have been attributed to losses sustained by Lloyd's Names.'' Lloyd's responded by complaining about ``objectionable and potentially damaging'' statements and warning that it was ``considering appropriate forms of redress.''
There is little doubt Lloyd's is on the defensive. In December, it offered 21,000 investors 900 million British pounds for their losses. Some accepted, but others talk of recouping losses with litigation.
Rowland's hopes appear to rest on the fact that nearly two-thirds of the underwriting of the organization is now in the hands of insurance syndicates that made profits in 1991.
Lloyd's is also hoping moves to open up the market to investment by companies under new limited liability rules will produce an inflow of funds and create a basis for future expansion. Over the next few years, however, Lloyd's seems bound to have to fight a rearguard action against Names determined to be compensated.