Hearing set for 24 June
Equitas is to transfer all of its 1992 and prior year non-life liabilities to a new company and boost its reinsurance coverage through Berkshire Hathaway.
If the move is approved by the High Court following a hearing on 24 June, it will liberate Lloyd’s Names from any further liabilities for that business.
This will mean that claimants affected by asbestos pollution and health hazard claims from the 1980s will no longer be able to claim from Names or Names’ estates, but instead from the newly-created company, Speyford Ltd.
Michael Deeny, chairman of the Association of Lloyd’s Members (ALM), said the move would give the 34,000 Names formal legal finality. “It has advantages for Lloyd’s itself too in terms of tidying up the past and taking the Names out of any loop or involvement in the policies,” he said.
The transfer means $7.8bn (£4.9bn) of liabilities move to Speyford, which will be registered as an insurance company, Equitas Insurance Ltd, subject to the approval of the Financial Services Authority.
“Instead of being an intermediary between the people who bought Lloyd’s policies in all the years up to 1993 [Equitas] will now become principal (the insurer),” said Deeny.
To increase security for policyholders, Equitas will purchase a further $1.3bn reinsurance cover from National Indemnity, a subsidiary of Berkshire Hathaway.
Equitas was advised on the transfer by PricewaterhouseCoopers and Clifford Chance. Policyholders and Names have been informed about the hearing through letters.
Equitas will host roadshows for policyholders and hold meetings for Lloyd’s Names on 2 June. “There may be objections [from policyholders] but we are confident that none is materially disadvantaged,” said a spokesman from PwC.