The $7 billion reinsurance deal between Berkshire Hathaway and Equitas is the best news for the Lloyd's market in quite some time. For while Lloyd's has taken giant steps to restructure its capital base, upgrade its internal management structure and streamline its operations, there was always a black cloud looming over its head, with some concerned about whether the market's pre-1993 loss facility would have enough pounds on hand to cover its mammoth asbestos and environmental liabilities.
Thousands of individual Lloyd's investors, known as “Names,” can achieve a sense of closure at last, and new investors can pony up their money confident that the market's financial crisis is behind it once and for all.
The deal–detailed by Dan Hays in NU's Oct. 30 edition, with its implications explored by Caroline McDonald in a sidebar–was described on our cover last week as a “rescue” of Lloyd's by Berkshire Hathaway CEO Warren Buffet. The CEO of Equitas, Scott Moser, might have summed it up best by stating that “Names wanted to sleep easy at night, and we think we've just bought them the world's best mattress.”
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