Supreme Court Rejects Suit Against Lloyd’s : Insurance: U.S. investors who accused the English firm of fraud plan to join Canadians in a British court case.

The U.S. Supreme Court on Monday rejected an attempt by American investors to sue Lloyd’s of London for fraud in U.S. courts.

The high court without comment let stand lower court rulings that the 110 U.S. investors in Lloyd’s--known as “names”--must use British courts to pursue their grievances against the insurer’s governing bodies and certain agents and syndicates.

Richard Rosenblatt of Rancho Santa Fe, coordinator of the American Names Assn., said Monday’s setback is only temporary and that many Americans will soon join Canadian names in a lawsuit filed in England.

The names, in the U.S. lawsuit, alleged that Lloyd’s solicitation of potential investors violated U.S. securities laws by misrepresenting the risk faced by the investors and failing to disclose the market’s liability for asbestos, pollution and other insurance claims.

Those claims, as well as claims from a string of natural disasters, have led to losses of $8.3 billion between 1988 and 1990, the latest years for which Lloyd’s has reported earnings. The names face unlimited liability for claims, and the losses have financially wiped out many of them.

Lloyd’s is a 305-year-old market made up of hundreds of syndicates that underwrite insurance policies of many sorts. About 80% of Lloyd’s names are British, but Lloyd’s has raised more than $1 billion in capital from more than 2,000 U.S. names.

A federal trial judge in New York dismissed the Americans’ suit without ruling on the merits of their claims. The judge said agreements the Americans had signed obliged them to press their cases in England and under purview of English law.

The federal appeals court in New York affirmed that ruling in June. The appeals court said the plaintiffs had an obligation to show that English law was inadequate to deter fraud, and said they failed to do so.

The investors appealed to the Supreme Court. They stressed that English law and legal procedure would almost certainly insulate the Lloyd’s defendants from liability.

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