Leaked letter to managing agents seeks information on Swiss Re
Lloyd's managing agents have been asked to give details to the franchise board about disputes arising from dealings with reinsurer Swiss Re.
In a letter leaked to Insurance Times, Lloyd's franchise performance director Rolf Tolle asks senior management within the managing agents to "notify me of any current or recent (ie within the last six months) circumstances where the Swiss Re or any group company is delaying or refusing payment on your outward reinsurance collections".
Senior executives have been given until 23 May to respond.
Market sources said this unprecedented step by the 314-year-old insurer was the first step to show the franchise board was serious about "assessing the risks that could threaten the market in the future".
"It looks like the franchisor is trying to gather information to make sure it can get a handle on the exposures and credit risks that a high dependency on reinsurance can bring," said the source.
But the letter has received mixed reactions. One chief executive at a leading managing agent said: "My reaction when I first heard about it was, wow is Lloyd's overstepping the mark?"
Another Lloyd's managing agent managing director said: "They've asked a valid question and will probably get valid answers."
At least one senior figure in a managing agency was sufficiently concerned by the letter to pass it to his lawyers.
He asked: "Is this question being asked in a regulatory capacity? What is our legal position? I'm not saying there's a problem - I just want to find out."
Lloyd's and Swiss Re are currently embarking on an arbitration wrangle which could last 18 months over a disputed £290m, which Lloyd's alleges the reinsurer owes it from a £500m policy to protect the market's Central Fund. Swiss Re contests the allegation.
Swiss Re spokesman Tim Dickenson said: "We have not been advised by Lloyd's of what it is doing, or why, and we will not speculate. However, we are confident that any fair assessment will confirm that Swiss Re pays all valid claims promptly."