Wellington Re vote hampered by delay, says ALM

Names are calling for a change in voting rules at Lloyd's after complaining that many were prevented from voting in a controversial business deal.

The Association of Lloyd's Members (ALM) tried unsuccessfully to get the deadline extended when Names had the chance to vote on the creation of new reinsurance vehicle Wellington Re.

The ALM is concerned that some Names did not receive information and forms in time to vote.

The proposal to launch Wellington Re was approved by a 60:40 majority who voted by the deadline on Thursday, 20 June.

ALM chief executive Anthony Young said that, under Lloyd's rules, forms should be sent to the members' agents 21 days before the poll.

Wellington sent details of the proposed deals to members' agents at the end of May, before the long bank holiday weekend. Some proposals were not forwarded until 11 days later.

Young said: "Given that a lot of Names are overseas and that the postal service, particularly in the US, can be pretty dire, we suspect that a number of them were effectively disenfranchised.

"The rules should require that the Names should be given 21 days' notice.

"We are calling for a change in the rules."

He described the situation as "unfortunate" and said he did not believe there had been a deliberate attempt to influence the result.

The Wellington Re deal became hotly contested because one in four members' agents advising Names recommended a `no' vote.

Hampden Agencies argued that the deal would allow some of the most profitable business in Lloyd's to leave the market without enough compensation for Names.

Three other members' agents highlighted the risks of Wellington's Syndicate 2020 going into run-off or ceasing to trade unless Names backed the deal, which transferred some business to Wellington Re.

John Frances, director of parent company Hampden Private Capital, said Names had been changing their votes up until the deadline and the deal could have been defeated if there had been more time.

Nigel Hanbury, chief executive of Hampden Agencies, which advises 25% of Syndicate 2020 non-aligned capacity, said: "We have sent a loud message to other managing agents who may think about doing something similar. The message is clear. Names will never again give their support to a deal involving such poor terms."

A Wellington spokesman said: "As far as we're concerned we acted as quickly as possible to get everything out. Twenty one days is the statutory amount of time and we complied with that."