Michael Bright, chief executive of Independent Insurance, launched a blistering attack on underwriting standards at Lloyd's this week
Speaking at the annual conference of the Association of Lloyd's Members (ALM), Bright accused the market of harbouring an arrogance that it had ten years ago. He made his comments as the ALM announced that private investors, traditionally known as Names, now called members, were set for a comeback. Many are now using limited liability companies.
Bright said: "It is no good looking at the traditions of Lloyd's, because underwriting concerns are fatally flawed. The arrogance that was here in Lloyd's ten years ago I am afraid is still there."
He added: "Good underwriting creates good, positive cash flow. Underwriting for cash creates large losses," before concluding: "I believe in Lloyd's. I don't believe in this Lloyd's."
ALM figures reveal that members using a bespoke, individually selected portfolio outperformed the market for the 1997 year of account.
Lloyd's Market Results and Prospects 2000 reveals that a profit of 0.2% was made by traditional bespoke portfolios in 1997, compared with a market-wide loss of 1.8%. The equivalent forecast figures in 1998 are losses of 3.8% and 7.2%.
ALM chairman Michael Deeny predicted the results would reverse the trend of declining numbers of members over the past decade.
"If you compare our figures with the corporate participants, there is quite a significant difference," he said. "We believe there will be new [members] joining Lloyds. I am not predicting a flood in the next year, but we will see increased numbers as the rate increase continues to strengthen."
He added: "The best syndicates at Lloyd's have underwriters who are experienced specialists concentrating on profitable niche markets. Innovation and flexibility are essential elements in their success. Individual [members] make healthy profits from such syndicates over the cycle."
