“During the consultation, we have listened carefully to the views of our members and the business operating in the market, and are pleased by the high level of support thats evident,” said Lloyds Chairman Sax Riley in a statement. “That support will, Im confident, translate into a vote strongly in favor of implementation.” The 16,000 members of Lloyds now have until Sept. 12 to vote on the proposals, when an extraordinary general meeting will be held.

Lloyd's received responses from 75 Lloyd's players, including third-party capital providers, managing agents and members' agents. From the responses, Lloyd's reached a number of conclusions, according to Mr. Riley.

The membership of the market broadly supports the creation of a Lloyds franchise system, designed to create and maintain “a commercial environment at Lloyds in which the long-term return to all capital providers is maximized.” In a letter sent by Mr. Riley to members, he reassured them that “the franchise is not about micro-managing individual businesses or second guessing day-to-day underwriting decisions.”

Some members oppose the introduction of annual accounting, but the Council of Lloyds believes there is clear support for an end to the markets historic three-year accounting system. “If we are to continue to attract new capital, we have to improve our comparability [with competitors] and transparency,” said Mr. Riley in his letter.

The market will go ahead with proposals to restrict entry of new unlimited liability members after Jan. 1, 2003, although existing unlimited liability members will be permitted to continue trading.

The proposal to replace both the Lloyds Market Board and the Lloyds Regulatory Board with a new Franchise Board will go forward.

Lloyds said it has appointed an as-yet-unidentified reinsurance broker to assist in closing 13 run-off years of account. If successful, this will allow the resignation of 3,600 members of Lloyds, which they are currently unable to do because they have run-off (or open) years. (When a year is left open, unlimited liability members must continue paying until all liabilities are met.) “[T]he identification of reinsurers interested in indicating a price to reinsure these years has been completed,” with quotes expected shortly, Mr. Riley said in his letter.

A.M. Best Company last week affirmed its financial strength rating of “A-minus” (Excellent) for the Lloyds market, “with a stable outlook.” See NationalUnderwriter.com/pandc/pchotnews.asp for more details on the Bests rating.

A summary of the results of the consultation are available on the Lloyds Web site, at LloydsofLondon.com.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, September 2, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.