A third Lloyd's syndicate may be involved in the losses which have hit the Personal Accident Spiral Group (PASG).
In addition to syndicates 103 and 718, Christopher Stockwell of the Lloyd's Names group says that syndicate 256 may also be involved. "We will be writing to them this week for more information," Stockwell said.
He said Syndicate 256 was an aviation syndicate in run-off. "It's a small exposure. They do not have the same problem as Syndicate 103," Stockwell added.
Syndicate 103 last week failed in arbitration against North American reinsurer Transamerica, which successfully claimed that Syndicate 103 had not revealed the true nature of the reinsurance spiral it was involved in when placing £3.1 million of accident cover in the 1990s.
The syndicate made a further cash call of 150% on its members who were already facing a 90% cash call. According to Stockwell, this makes a loss per line of 245%, eight times as much as the Names put up as capital.
There are 273 Names in the 1993 year with a stamp capacity of £7.3m. So the average Name was writing £30,000 with losses of £70,000 per Name.
Stockwell said around half the Names on the group are already ruined and the loss will fall on the Lloyd's Central Fund.
He added that the Names not already ruined are raising a legal fighting fund and are likely to start legal proceedings.
The total £7m of cover was placed by broker Stirling Cooke. The broker arranged the reinsurance with Transamerica and other North American reinsurers.
On a stamp of £7m, there have been gross claims of £90m in the last accounts. Of £60m claims paid, £57m had been received in reinsurance.
Separately, the Syndicate 103 Names are challenging whether or not they were members of the syndicate. The agencies that ran the syndicate and have gone bust, failed to complete the necessary deed to register Names as members. The Names believe that, under Lloyd's rules, without such a deed they are not liable for the business that has been written.
