Analysts and Lloyd's market figures slammed the idea that consolidation between smaller Lloyd's vehicles would go ahead. Their doubts followed news that Warren Buffett would back plans to consolidate small Lloyd's vehicles last week.
Berkshire Hathaway is set to take a 25% stake worth £33.5m in Capital Insurance, which was set up to consolidate the vehicles. Capital is set to acquire Euclidian next week. It is headed by Michael Wade, former chief executive of CLM.
One analyst said: "I don't think consolidation will happen. I can't see what he [Michael Wade] is bringing to the table that others couldn't."
An industry source agreed: "If our shareholders wanted it done, we wouldn't do it with Wade's vehicle, we would do it ourselves."
Insiders added that Buffett would be the only one to benefit from the plan, as it would reduce his exposure to the market in the short term.
"It's more of a ploy for Berkshire Hathaway to get out of the £77m letter of credit that is used to support Euclidian," said the source.
The source added: "GoshawK would be the next good place to start for Capital, as it has shareholders that want a solution to the problem. Another possibility could be Highway."
Previous attempts to merge the small Lloyd's vehicles were foiled by clashes between strong willed individuals and underwriters.
Three years ago, Wade invested £70m in Lloyd's vehicles to initiate the consolidation process. Wade believes investors are now more open to deals.
But a source said: "London market vehicles will still resist and a number of senior people would leave."
