Five hundred of Britain’s wealthiest people met Monday to hear how they face possible financial ruin because of large damage awards to asbestos victims in the United States and misappropriated insurance funds at Lloyd’s of London.
Those who met at London’s Royal Festival Hall were among 1,500 Lloyd’s members who each must come up with as much as 500,000 pounds ($625,000) in cash to cover $162.5 million in present and future losses.
Among those affected is Queen Elizabeth II’s cousin, the Duchess of Kent, although the duchess did not attend the meeting.
One of the members, Anna Marshall, told a reporter: “I stand to lose my home, and I have no family to turn to. It’s scaring.”
Total Wealth as Stake
Under the rules of the 300-year-old insurance exchange, each member--or “name"--is liable for insurance losses up to the full extent of his personal wealth.
To qualify for membership, a person must prove he is worth at least 100,000 pounds in cash, or about $125,000 at current exchange rates.
The losses were incurred by five syndicates, or groups of members, that underwrote product liability insurance for large American corporations, including Manville Corp. and other asbestos manufacturers.
Monday’s meeting, which was closed to the press, was called by the Richard Beckett Underwriting Agencies, which manages the syndicates. The firm was hired to sort out problems left by the previous manager, Minet Holdings.
Beckett’s managing director, Richard White, said at a press conference after the meeting: “I deplore what has happened to the names. They are in a massive predicament.”
“We have had some heart-rending letters which distress me. People are asking, ‘What do I do? What are the technicalities of bankruptcy?’ ” he said.
White said the claims against the members include $50 million allegedly misappropriated by Minet, $75 million in insurance losses through 1984 and $37.5 million in anticipated future losses.
Probe Under Way
The Department of Trade is investigating allegations that Minet executives used questionable reinsurance contracts to divert money into yachts, private jets, holiday villas and Kentucky race horses.
White said the insurance losses had come because the syndicates took on a “very hazardous” class of risks. “The losses result from bad underwriting,” he said.
White is to meet today with bankers and Lloyd’s officials to discuss a plan under which the members would have to pay $10 million now and the rest over a number of years.