Names fear Wellington Re will cream off 2020's best business
An increasingly bitter row threatened to mar the launch of the UK's biggest independent reinsurer this week.
A group of Lloyd's Names is trying to block the creation of Wellington Re when it is put to an investors' vote today.
They described the terms of the reinsurer's birth as "disgraceful", "bad for Lloyd's" and "bad for Names".
Wellington Underwriting plans to use £448m, raised from venture capitalists, to set up the reinsurance company.
It has so far received the support of 72% of the nearly 2,000 Names who back its Lloyd's Syndicate 2020.
Chief executive Julian Avery vowed Wellington's plans would not suffer.
"We are confident that we will win the day," he said.
But Lloyd's members' agent Hampden Agencies is urging Names who have already voted in favour to change their vote, which they can do up until the voting closes at 5pm on 20 June.
Hampden's said that Names will lose out because they are not being offered fair compensation for the transferral of business from Syndicate 2020 to the proposed reinsurance company.
They also claim the new vehicle will cream off the most profitable business from 2020, endangering the syndicate's future and damaging Lloyd's.
Chief executive Nigel Hanbury accused Wellington of designing a deal which handed profits to its staff rather than to the Names who had supported the market through the appalling losses from 11 September.
The deal would give up to around 40 Wellington staff share options worth about £25m whereas about 2,000 Names would have to split options worth a total of about £27.8m according to a valuation by independent advisers Hawkpoint.
Hanbury said: "To see most of the 11 September payback leave the Lloyd's market and to the financial benefit of the Wellington management moving over to Wellington Re is quite disgraceful."
Avery argued that Hawkpoint had recommended the deal as "fair and reasonable".
He said: "It's notable that Hampden's have never mentioned that they had received advice from an independent financial adviser that the proposal is in the best interest of Names."
Wellington will increase its capacity in Syndicate 2020 by 11% for next year.
Avery said: "This gives the lie to those who say that with the formation of Wellington Re we will have to shrink the syndicate."
