Strategy group modernisation plan could face delay

Plans to modernise Lloyd's could be delayed as managing agents refuse to buy out unlimited liability Names.

In January the Chairman's Strategy Group (CSG) in association with management consultants Bain & Co proposed ways to radically shake up the 314-year-old market. This included ending unlimited liability Names by 2005.

Lloyd's 49 managing agents would buy out private individual's rights on syndicates through "sale and leaseback".

But, according to the Association of Lloyd's Members (ALM), Names look likely to stay.

An ALM newsletter said: "The planned deferred purchase of third party capacity, which would have taken place this year with effect from the 2005 account, has run into serious difficulties because a majority of the managing agents, who would have to underwrite the loan which Lloyd's would raise, are against the proposal...

"...consequently there is no realistic expectation of Names receiving a cash payment this summer or autumn, as a result of such a buy-out."

MAP Syndicate 2791 active underwriter David Shipley said his managing agency wanted the backing of private investors.

"We do not have any appetite for buying other people's participation on the syndicate," he said. "We welcome diverse capital and have no aspiration for our agency to own any underwriting capacity."

Kiln director Andrew Fleming-Williams said managing agents would prefer to spend the money on increasing the amount they can underwrite.

"At this stage in the market there are so many underwriting opportunities around that if one has got any capital it makes much more sense to develop underwriting business rather than buy already existing capacity.

"Kiln has always liked the idea of hybrid capacity."

Hiscox chief executive Robert Hiscox added: "The Council of Lloyd's would be advised to take CSG bit by bit. To come between unwilling buyers and sellers and force a big bang at this time is not appropriate."