"Despite working with Goshawk's management and imposing significant underwriting restrictions, it has not been possible to resolve a number of problems," said a Lloyd's representative in a statement. "Lloyd's has taken this action in the best interests of the Society and of the syndicate's policyholders, whose financial security will not be affected by this decision."

Certain people in the market have had concerns that Goshawk did not have in place adequate underwriting standards, nor a sufficient understanding about what was going on in the business it was underwriting, said several market sources.

Goshawk officials were not available to comment.

In a statement, Lloyd's said it will work closely with Goshawk to ensure an orderly run-off of the business and that the action has been taken in close cooperation with the Financial Services Authority, the U.K. regulator.

"Losses generated in [Goshawk] Syndicate 102 from the 2001 and prior years have severely depleted Goshawk's funds at Lloyd's, and as a result additional capital would be required to trade forward into the 2004 year," said Goshawk Insurance Holdings plc in London.

"Goshawk expects that its funds at Lloyd's will be retained by Lloyd's to cover losses from Syndicate 102," said the company. "This will involve Goshawk surrendering some 45 million of cash and securities held by Lloyd's and contributing a further 20 million to collateralize a letter of credit facility."

Goshawk's liability is limited to its funds at Lloyd's, the company said.

The company has a reinsurance business in Bermuda called Goshawk Reinsurance Limited, which had its financial strength rating of "A-minus" affirmed by A.M. Best on Oct. 21. "Goshawk will emerge from this restructuring as a pure reinsurance company," Goshawk said.

Goshawk got involved in some loss-making lines of business that were not adequately covered by reinsurance, said market sources, who did not want to be identified.

"They also got heavily involved in reinsurance of U.S. viatical insurers, which purchase term or whole life policies from individuals with terminal diagnoses," said one market source. "Then the capital sum paid to the individual is funded by a bank loan. The viatical insurer takes over the payment of the premiums to the policy. It is a form of reinsurance paid out to the viatical company in the event the individual lives longer than expected." (Viatical is also known as contingent cost insurance.)