Lloyd’s to Offer $4.7 Billion to Its Investors : Insurance: Groups want compensation for losses. The proposal is more than three times that of an earlier plan.

Trying to extricate itself from a morass of litigation, Lloyd’s of London is expected today to offer a $4.7-billion settlement to its private investors, many of whom have already been financially ruined by the insurance market’s unprecedented string of losses.

London newspapers reported Sunday that the proposed settlement--more than three times the value of an offer that investors rejected previously--would be unveiled today by Lloyd’s Chairman David Rowland.

The proposal has apparently won “provisional approval” from some of the dissident investors’ groups, the Financial Times said.

“A month ago I would have said that the odds are against a settlement. Now I would be more interested in betting on it,” John Mays of the litigating Merrett Names’ Assn. told the newspaper.

Thousands of Lloyd’s investors, known as Names, are suing the 308-year-old organization, seeking compensation for some of the more than $10 billion in losses that Lloyd’s sustained through such disasters as the Exxon Valdez oil spill and through court verdicts compensating American victims of asbestos-induced lung disease.

“It’s not clear whether they would extend this offer to all Names, including those who are not involved in litigation,” said William Hayden, a Cincinnati lawyer who is a Name and represents about 50 others in the Cincinnati area. He said a settlement that excluded a large class of Names would probably only invite more litigation.

More than 3,200 Americans are either active or former Names, and of those, hundreds are involved in lawsuits accusing the insurer of fraud in the way it recruited investors.

However, one after another, the U.S. lawsuits have been rejected by federal courts, which have ruled that British courts have jurisdiction over such disputes.

Most recently, a federal judge in San Diego early this month dismissed a lawsuit by 574 American Names who claimed that Lloyd’s representatives gulled them into investing without disclosing the risks.

Names pledge their entire net worth as a guarantee against underwriting losses. Some Names have been financially unable--or have simply refused--to pay losses as they have come due.

Although the proposed offer is nearly $1.6 billion more than expected, “it is only 30% of the loss Names have suffered, and it comes too late for many to repair their lives,” the Sunday Times of London said.

For many such Names, an important provision of the proposed offer is a cap on future losses, allowing them to sign a final check and be free of any further liability.

“Lloyd’s hopes winners among its investors will be willing to bail out the losers. It hopes to take profits made in the last three years earlier than usual and divert them to help investors who lost fortunes before 1991,” the Sunday Times said.

Details of the proposed settlement are expected to be accompanied today by Lloyd’s official announcement that it lost about $1.5 billion in the 1992 underwriting year--its fifth straight year of losses.

Under Lloyd’s accounting system, final results are not announced until three years after the end of a calendar year.

Still, Lloyd’s has denied reports that it is facing a financial crisis and will not pass an annual solvency test.