Lloyd's cannot survive without unlimited liability Names, critics have warned.

Association of Lloyd's Members (ALM) chairman Michael Deeny said recommendations by Bain & Co to end 314 years of trad ...

Lloyd's cannot survive without unlimited liability Names, critics have warned.

Association of Lloyd's Members (ALM) chairman Michael Deeny said recommendations by Bain & Co to end 314 years of tradition would bring Lloyd's downfall.

"It will damage the market to have limited liability," he said. "Lloyd's needs all the capital it can get at the present time."

Australian Association of Lloyd's Members (AALM) deputy chairman Patrick Moore added: "Lloyd's is stark raving mad as the Names have provided the capital at low cost."

Deeny said it was unlikely the recommendations would be ratified.

Lloyd's Names Association chairman Christopher Stockwell said: "This is totally self-destructive. Corporate capital has proved itself fickle and has no fundamental need for Lloyd's."

Earlier this month, Tony Markel slammed the 314-year-old market for its

"pervasive institutional arrogance".

But he has now welcomed the proposals.

He said: "I am gratified there seem to be some concrete proposals coming out."

Financial director of Lloyd's corporate insurer Goshawk Insurance Holdings, Chris Fagan, welcomed the debate over the future of Names.

He said Lloyd's would be more efficient if it used corporate capital rather than a mix of corporate and personal wealth.

"The function of Lloyd's is to maintain a brand name," he said.

The Bain report in a nutshell

  • What is it? Last April consultant Bain & Co began a review into the future of Lloyd's. It worked with Lloyd's chairman Sax Riley, and a working party was set up to include views from all market sectors
  • Why is it significant? It recommends sweeping changes to the 314-year-old market and now faces opposition from individual investors called Names
  • Why should Lloyd's change? Lloyd's has come under pressure to modernise so it can compete with other insurance and reinsurance markets
  • What does it recommend? It calls for an end to unlimited liability with no new Names accepted and all existing Names converting to limited liability by January 2005
  • Anything else? Bain & Co suggests replacing Lloyd's existing regulatory and market boards and committees with a single franchise board and that the current three-year accounting system should be replaced with a more conventional one-year GAAP accounting plan
  • What happens now? The Council of Lloyd's cleared the reforms last Thursday. The proposals will be presented to businesses and representative organisations in Lloyd's.