Second Equitas proposed to give Names cash for giving up right to trade
Lloyd's is in discussions with Names to close their open years. This could lead to the creation of a second Equitas.
In January, the Chairman's Strategy Group (CSG) and management consultants Bain & Co suggested Lloyd's modernise its capital base. It was proposed the 314-year-old market ends unlimited liability and Names receive a cash sum for surrendering their right to trade.
Although many individuals have indicated they are prepared to walk away from the market in January 2005, the majority want their open years closed.
Association of Lloyd's Members (ALM) chief executive Anthony Young said: "If this compulsory acquisition was to go ahead, then they would not vote [in favour] unless they had a cast iron guarantee all open years will close at a reasonable reinsurance to close (RITC)."
The ALM, the High Premium Finance Group, and members agents are now holding weekly discussions to determine the feasibility of closing 75 syndicate years of account. Lloyd's Members' Services Unit managing director Steve Quiddington chairs the meetings.
Young said one possible option was creating a separate vehicle, like Equitas. The limited liability reinsurance vehicle was created in 1996 to reinsure and assume liability for 1992 and prior years.
"We are quite keen on a second version of Equitas," he said "It is one way which is being discussed which might become a definite proposal."
He said another option was expanding Lloyd's subsidiary CentreWrite's role to provide RITC on a syndicate. Centrewrite currently offers exeat policies to individual Names which are on run-off syndicates.