Judge Rejects Claim Against Lloyd’s
Hundreds of investors faced ruin Friday after a British judge ruled that Lloyd’s of London did not mislead them into risking all they owned with the insurer while it knew huge losses were on the horizon.
In the latest chapter in a saga that has involved suicides, divorces, nervous breakdowns and lost family fortunes, Justice Peter Cresswell rejected the so-called Names claim that Lloyd’s lied to them about looming claims for compensation connected to asbestos-related diseases.
They also were exposed to claims for losses from Britain’s 1987 hurricane and the Piper Alpha oil-rig disaster in the North Sea in 1998, in which 167 people were killed.
Total losses at Lloyd’s during the 1980s ran to about $11.5 billion. Asbestos claims amounted to about half of that sum.
While clearing Lloyd’s of wrongdoing, the High Court judge harshly criticized operations during the 1980s at the world’s largest insurance market.
“The catalogue of failings and incompetence in the 1980s . . . is staggering and brought disgrace on one of the City’s great markets,” Cresswell said in a 400-page written opinion. “Many Names have suffered enormously in financial and personal terms.”
Lloyd’s Chairman Max Taylor said the insurer will press the Names to settle their debts, which he said totaled about $73 million.
“There’s absolutely no legal reason why these Names should not now pay their debts,” he said.
About 210 Names were involved in the court action Friday, their lawyers said.
Asked whether Lloyd’s would go so far as to force them to sell their homes and other personal assets, Taylor said, “We have always been willing to negotiate with Names who owe us money, based on their ability to pay.”
The United Names Organization, the umbrella group for the Names whose action failed Friday, is seeking redress in the European Court of Human Rights.
“This will allow us to widen our allegations to cover negligence and breach of statutory duty which previously we were prevented from making. Quite apart from the fact that we may decide to appeal today’s decision,” said Catherine Mackenzie Smith, co-chairwoman of the group.
Names, once mainly from Britain’s wealthiest families, accept unlimited liability, which allows them a greater share of premiums but also leaves them open to losing everything.
From fewer than 8,000 in 1975, the number of Names peaked at more than 32,000 in 1988, which United Names says was part of a plan to spread losses while knowing that the new members would never make money.
Lloyd’s said 1,200 Names owe $435 million. This includes the 230 Names in the case who owe nearly $73 million.
United Names says about 15 people have killed themselves because of losses at Lloyd’s.
The judge said Lloyd’s should set up an independent panel to consider individual cases of those who had not accepted a reconstruction plan to cut losses offered by Lloyd’s in the 1990s.
Famous Names have included former Prime Minister Edward Heath, newspaper magnate Robert Maxwell, author Jeffrey Archer, Prince Michael of Kent and Camilla Parker Bowles, companion of Prince Charles.
