Insurance chief slams Lloyd’s
Article Date: Oct 07 2006Proposals from the £15 billion Lloyd’s insurance market to restore the role of private individuals or ‘Names’ as capital providers will be self-defeating and drive even more companies to shift their business away from London. So claims Barbara Merry, chief executive of Hardy Underwriting, who argues more companies will follow the latest example, AIM-quoted Omega Underwriting at 144p, in setting up a holding company in the tax haven of Bermuda.
Some observers suggest leading player Wellington Underwriting, speculative at 93.25p, could consider joining the exodus. Merry, a former Lloyd’s official, says Hardy ‘is not rushing to Bermuda just yet, but the tax regime has its attractions and we’ve got to contemplate it’.
‘Lloyd’s has mucked it up,’ declared Merry last week. Her remarks are triggered by two proposals from Lloyd’s chairman Lord Levene to revive Names’ participation: lighter and more flexible rules for syndicates using Names backing and special purpose reinsurance syndicates for Names.
Corporate capital has increasingly taken over from the Names as chief provider of underwriting capacity for Lloyd’s insurance syndicates. Hardy, which manages successful Syndicate 382 and intends to increase its capacity 75 per cent to £175 million with the launch of a new syndicate, 3820, is seeking to buy out its nine per cent of remaining Names’ syndicate capacity, to allow more flexible syndicate operation.
Fully-listed Hardy, now 241.75p and expecting ‘a very good year’ if US hurricane season ends benignly in mid-November, has offered to pay remaining Names 38p per pound of capacity, plus profit guarantees for remaining underwriting years and nine per cent profit participation for 2007 and 2008, to buy them out. The company does not want Levene’s plans to deter acceptances.
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