Unlimited liability Names have been the mainstay of Lloyd's. If they go, John Jackson asks, will the new corporates be just as loyal?

Whatever happened to the entrepreneurial spirit at Lloyd's? Have the market's great and good at last lost their nerve? One would certainly think so from the decision of Lloyd's Council - the market's ruling body - to phase out unlimited liability Names.

Without question the introduction of corporate capital saved the day after the near collapse of the market with £8bn of liabilities incurred between 1988 and 1992.

Clearly reforms were needed, as recently recommended in the Bain Report and agreed by the Council. This includes ending the farce of three-year accounting, introduced when Lloyd's was purely a marine insurance market and ships took three years to do many round trips and settle their accounts.

Yet, this Stalinist centralisation of forcing all syndicates to go fully corporate is self-defeating. Lloyd's has always prided itself on being a market of individual syndicates underwriting for their own account.

So why prevent a syndicate from accepting unlimited liability individual investors if it wants to do so? Particularly as, according to independent analysts Chatset, syndicates with Names have done better than the single corporates.

Incidentally, what a sad day it is that Chatset is giving up publishing its league tables after 21 years. Corporates are not interested, and the number of Names is a fraction of what it was a few years ago.

Certainly Chatset will be missed - the warnings from its stalwarts Charles Sturge and John Rew have been a major source of quality research that often belied the gloss sometimes put on the market's poor performance by official sources.

Moreover, despite the refuseniks who would not settle their losses for the 1988-1992 disasters and even took action against Lloyd's in the courts, the bulk of Names paid up.

The big question for Lloyd's is: will the corporates stick so soundly in difficult times as Names did if big problems arise? Shareholders may take a less sanguine view of staying in a market that is producing losses, forcing corporates to withdraw.

The long-term position of corporates will be put to the test before long. The figures for the disastrous 1999 year of account will be announced shortly, and Chatset has dramatically increased its forecast of losses from 10.6% a year ago to 17.06% now.

Although, on the positive side, premium income is up on 1998, nevertheless loss ratios in most sectors are at an all-time high, according to Chatset. And the years 2000 and 2001 (that includes the World Trade Centre losses) are not looking too hot either.

In which case, a little entrepreneurial, independent cash from loyal Names might be just the ticket.