Lloyd’s of London Reports $3.83-Billion Loss : Insurance: The red ink for 1989 was the worst in its history. Investors say the firm is guilty of mismanagement and perhaps fraud.

Lloyd’s of London, the famed high-risk insurer, has suffered a $3.83-billion loss, the worst in its 304-year history, its chairman told hundreds of angry investors Wednesday at their annual meeting.

“We meet today in the midst of one of the darker chapters in the long history of our society,” Chairman David Coleridge said as he stood near the Lutine Bell, which once was rung on news that a ship was lost at sea.

“It is an appalling result, reflecting the extreme losses of a handful of syndicates,” he said of the red ink reported for 1989, the last accounting year under Lloyd’s three-year system.

Hundreds of investors-- who are known as “names” and who pledge their personal wealth to underwrite Lloyd’s policies by participating in groups or syndicates--said they faced financial ruin because of the losses suffered by the historic insurance mart.

Even the country property market outside London reportedly has been hard hit because names, scrambling to cover their liability for Lloyd’s losses, have been forced to sell estates. Investors, who must possess and pledge assets of at least $400,000, have been able to make big profits for decades without expending any cash.

Coleridge blamed the huge losses on several 1989 disasters, including the Exxon Valdez oil spill in Alaska, Hurricane Hugo in North America and the San Francisco earthquake.

But many of the 31,000 investors argue that their losses were due to mismanagement and even fraud.

“The chairman has sat fiddling while Lloyd’s has been burning,” said Richard Boyton, a Cambridge name who faces “heavy losses.”

John Harris, another irate investor, said Lloyd’s should have regulated against “totally irresponsible advice.” He added to applause: “Some of us put all our trust in the history and reputation of this institution. Is it any wonder many of us feel totally betrayed?”

Coleridge said more than one-third of the loss involved five of the 401 underwriting syndicates.

But investors, particularly in America, have accused Lloyd’s brokers of placing them in weaker syndicates with the greatest exposure and incompetent underwriters. The disgruntled investors, who face unlimited liability, contend that some sections of the Lloyd’s market made huge profits and others suffered only small losses--and that insiders profited at the expense of the wider membership.

Lloyd’s, however, has won several American legal cases in which courts have ruled that disputes between investors and Lloyd’s agents must be argued in British, not U.S., courts.

Coleridge said Lloyd’s--famed for accepting great, often highly specialized risks, including coverage for the legs of film star Betty Grable and a prize for capturing the Loch Ness monster--could continue to exist as a high-risk insurer with a capacity of around $14 billion.

The market now has resources of about $18 billion, but this is expected to fall as thousands of names resign and few new individuals join the Lloyd’s syndicates.

Faced with hundreds of dissidents calling for a no-confidence vote in its ruling council, Lloyd’s has agreed to an extraordinary general meeting July 24.