Names Reject $1.32-Billion Lloyd’s Offer

Lloyd’s of London said Monday that its offer of compensation to its members, aimed at staving off court action, has failed.

It said a $1.32-billion settlement proposal to 22,000 of the insurance market’s backers, investors known as Names, had been rejected.

A balloting of the Names, mostly members of the wealthy families who have supported the market since its inception 300 years ago, closed Monday with only 38% accepting the offer by value. Lloyd’s had been looking for 70% acceptance, by value.

Lloyd’s made the offer in an effort to dissuade Names from suing many of their agents in the world’s largest insurance market.

The Names have set up more than 30 action groups to investigate and pursue allegations of negligence and mismanagement against their agents, since the announcement of record market losses of $8.07 billion over the last three years. The losses were attributed to claims stemming from a number of major natural disasters around the world.

Lloyd’s Chairman David Rowland said the result of the vote was regrettable and that litigation was the only course remaining.

“I have always made it clear that whether or not we achieved a resolution would not affect the future development of the Society (Lloyd’s),” Rowland said in a statement.

A spokeswoman for Lloyd’s said the compensation offer had lapsed. Rowland said he would concentrate on enacting a business plan, unveiled last year, for restoring the troubled market to profit.

Independent analysts said last week that the Names also would face losses of at least $4.4 billion over the next two years.

Names’ action group leaders said the settlement offer would have stripped the Names of too many of their legal rights. They described it as one-sided, in favor of market professionals.