Fraud-hit Lloyd's broker forced to close
ESR Insurance, the Lloyd’s broker at the centre of an alleged multi-million pound fraud, has been forced into administration, company directors announced this week.
The Lloyd’s broker said it had been left with significant potential claims from third party creditors, adding that the appointment of administrators was the only way forward for the company.
The company had allegedly fallen victim to a fraud in its surety bond division, which will now be shut down. Administrators say the remaining two divisions of the company will be sold in a bid to pay off creditors.
ESR has already suspended director David Bedford, who headed the surety bond division, and is investigating the alleged invalid issuing of bonds and insurance. The police, the FSA and law firm Clifford Chance are also reported to be assisting in investigations.
Andrew Hosking and Stephen Akers of Grant Thornton were appointed as administrators.
Hosking said: “It is hoped that through the administration process, the company’s other two divisions can be preserved and sold for the benefit of the company’s creditors and that other potential realisations can be made in order to afford a compensatory package for those with claims.”
ESR said that bonds that were issued by, or (re)insurance that was placed with North American companies were written without authority and are likely to be invalid. An internal memo asked staff to hand details of dealings with the bond division over to internal investigators.