Amid the doom and gloom of the early 1990s, Equitas promised hope to investors who faced the prospect of suffering unlimited losses.
When Lloyd's stood on the brink of collapse, the company rose from the ashes, promising to oversee claims payouts for policyholders. The aim behind the creation of Equitas was clear – this was supposed to be a new beginning, it was intended to help wipe the slate clean.
Some five years later and Equitas has been forced to strengthen its reserves for asbestos payouts yet again. The increase in claims is not their fault – compensation culture is running rife nowadays and it has impacted across the insurance industry as a whole.
Yet threats the 34,000 Names that signed up to Equitas may have to help pick up the tab is unwelcome news. It is a return to the bad days when the reputation of Lloyd's was dragged through the mud.
Many private investors feel they have already suffered enough, putting their houses on the market to fund the company's coffers. Others just want to leave the past behind them and forget the whole unfortunate affair. The days of selling cuff-links and your child's teddy bear is bound to leave a bitter aftertaste.
Fitch is now saying Equitas may have got its figures wrong. The Lloyd's Names Association (LNA) is also questioning the amount put aside for asbestos claims.
But whatever the calculations behind the reserve increases, Equitas needs to stand firm and prove itself. If its sums have been totted up incorrectly, the name of Lloyd's will once again be at stake.
Equitas cannot afford to make so grave a mistake.
