Lloyd's chief regulator has spelt out “seven deadly sins” that will trigger action against syndicates and managing agents that perform poorly this year.
Half of all Lloyd's losses between 1998 and 2000 were sustained by the market's bottom 25% of syndicates, Lloyd's revealed.
Director of regulation David Gittings told an audience gathered for the Practical Guide to Lloyd's Regulation that there were seven key weaknesses that would trigger regulatory action: an individually and collectively weak board, failure to comply with codes of practice, inadequate independent reviews, reinsurance recoveries, aggregate monitoring, credit control and management of cash flow.
Gittings stressed, however, that the primary burden for ensuring compliance would rest with firms and individuals in the Lloyd's market rather than the regulators themselves.
Last July, Lloyd's Prudential Supervision Committee imposed capital loadings against 19 syndicates after a review showed some had breached strict thresholds for actual and forecast losses. At that time the syndicates represented 15% of Lloyd's total capacity last year of £10bn.
Capital loadings were subsequently lifted from three managing agencies and one syndicate in November.
But this leaves the following 14 syndicates burdened with capital loadings for the 2001 year of account:
