Change to Financial Services and Markets Act required
Lloyd’s Names’ liability vehicle Equitas is to transfer the last of its pre-1993 reinsurance liabilities to Warren Buffet’s National Indemnity Company (Nico), if it gets High Court approval, the FT reports.
This would be second phase of a 2006 deal for a unit of Buffett's Berkshire Hathaway to take on the liabilities. The law at the time did not permit the transfer of the liabilities, only their reinsurance.
The second phase involves Nico supplying a further $1.3bn (£819m) of reinsurance to make a total of $7bn of cover and the transfer of all pre-1993, non-life business to a new company called Speyford.
This is only possible after changes to the insurance business transfer provisions of Part VII of the Financial Services and Markets Act.
Hugh Stevenson, the chairman of Equitas, said: "This transfer and reinsurance will secure the position of the policyholders and mean that the Names will finally be able to walk away under English law. We would like to say to the Names that, as best we can judge, you no longer have to worry."