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. Last Updated: 07/27/2016

Investors Take Lloyd's Settlement

LONDON -- Lloyd's of London on Friday said enough investors had accepted its ?3.2-billion ($5-billion) 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, or "names" -- 91 percent of total membership worldwide -- had accepted the offer and that the acceptance deadline had been extended to noon London time Sept. 11.


The statement was the best indication yet from the 300-year-old market that its recovery plan would work.


Other conditions still need to be met before the entire package can go ahead, including British government approval.


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 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 coffeehouse, was struck a potentially devastating blow by massive insurance losses from hurricanes and asbestos claims.


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 not received confirmation that in some cases Lloyd's would foot their final bills and in other cases 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.


Equitas must approve the financial package, which it is expected to do shortly.


The Department of Trade & Industry also has to approve the recovery plan. "The timing of that is not in our hands," said Lloyd's Chairman David Rowland, who added he hoped the official moves would come as early as next week.