APPENDIX 1: BUSINESSES AT LLOYD’S

Top ten syndicates by capacity, 1987 and 1997, with agency rankings

1987 1997

Syndicate Stamp Managing Agent Syndicate Stamp Managing Agent number capacity agent rank1 number capacity agent rank1 (1988) 418 £220 m Merrett 2 2001 £530 m Murray 5 Lawrence 206 £200 m Sturge 1 33 £201 m Hiscox 4 799 £175 m Merrett 2 488/2488 £330 m Ace2 2 210 £167 m Sturge 1 510 £303 m RJ Kiln 9 932 £117 m Janson Green 4 672 £263 m Wellington3 3 362 £116 m Murray 5 435 £234 m DP Mann 13 Lawrence 190 £113 m Three Quays 16 861 £225 m Brockbank 6 367 £113 m Secretan & Co 10 218 £212 m Cox 7 317 £111 m Outhwaite 19 51 £187 m Wellington3 3 448 £106 m Wellington 3 37 £174 m Ockham2 17 1 Rank refers to agency groups. 2 Including many former Sturge syndicates. 3 Merged in 1997 with Catlin Underwriting Ltd. Source: Lloyd’s APPENDIX 1 331

Changing fortunes: managing agents at Lloyd’s 1988, 1998 and 2010

Capacity Capacity Capacity Rank 1988 1998 2010 (£ m) (£ m) (£ m) 1Sturge Group1,270Bankside1 755 Kiln 1,562 2 Merrett Group 764 Ace2 692 Catlin3 1,441 3Wellington 420 Hiscox/Venton 606 QBE4 1,365 Group 4 Janson Green 374 Brockbank 552 Beazley 1,307 Furlonge 5 Murray Lawrence 331 Wellington 551 Hiscox 1,195 6 Methuen 309 Murray Lawrence 538 Amlin5 1,100 7 Wren 294 Kingsmead, 530 Chaucer 986 Beazley, SVB 8 Bankside 277 Cox Group 484 Liberty 910 9 Gooda Walker 272 Octavian 393 Brit 745 10 FLP Secretan 260 Kiln 356 Ascot 700

1 Includes Janson Green. 2 Includes Methuen. 3 Includes Wellington. 4 Includes Bankside and Janson Green. 5 Includes Murray Lawrence. Source: Statistics Relating to Lloyd’s

Top ten members’ agents, 1988 and 1998

1988 1998 No. of No. of Agency Group Agency Group members members Sturge Group 2,658 Sedgwick Oakwood 684 Sedgwick Lloyd’s 1,915 Stace Barr 623 Willis Group 1,664 Christie Brockbank Shipton 619 Merrett Group 1,256 Aberdeen 612 Fenchurch 962 Falcon 595 Poland Group 742 Kiln Cotesworth Stewart 566 Bowring Members Agency 721 Bridge Underwriting Agents 501 Wellington Group 642 Murray Lawrence Members Agency 471 Dashwood Outhwaite Group 609 Richmond 432 Stewart, Gray’s Inn 596 Greenwich 426

Source: Statistics Relating to Lloyd’s 332 APPENDIX 1

Ten largest Lloyd’s brokers, 1986

The larger Lloyd’s brokers belong to groups who conduct much of their business elsewhere. The following ten brokers were ranked by size in the London market in 1986 Sedgwick Group Willis Faber C.T. Bowring (Marsh Group) Minet Stewart Wrightson Hogg Robinson Alexander Howden C.E. Heath Jardine Insurance Brokers Group Bain Clarkson

Source: London Market Newsletter

Ten largest Lloyd’s brokers, 2014

At the time of writing, the two largest broking groups each have worldwide revenues of over $11 billion. There is no official ranking of Lloyd’s brokers. Ranking is not straightforward, as it depends on the criteria chosen and the availability of comparable information; the order shown below is therefore only approximate Marsh & McLennan Aon Willis Group Jardine Lloyd Thompson Arthur J. Gallagher Miller NMB & Cooper Gay Howden Broking Group RK Harrison Group Price Forbes & Partners

Source: estimate compiled from various sources APPENDIX 2: NAMES’ MINIMUM WEALTH AND DEPOSIT REQUIREMENTS 1969–2002

£350,000

£300,000

£250,000

£200,000

£150,000

£100,000

£50,000

£0

1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Minimum wealth requirements for UK domiciled Names were dropped from £75,000 to £50,000 following the Cromer report. For Names domiciled elsewhere, requirements were higher. For vocational Names they were lower. In 1978, a category of ‘mini-Names’ was introduced, for which the minimum wealth re- quirement was only £37,500. This was dropped from 1 January 1980. Each member’s OPL was restricted to twice the amount of wealth shown, until 1988. A min- imum deposit, from 1981 expressed as a percentage of OPL, was also required. The minimum deposit requirements require too many qualifications to be expressed accu- rately on a chart. Broadly speaking, British-domiciled Names were required to deposit an effective 20 per cent of OPL until 1981, when it was increased to 25 per cent. From 1988, the 334 APPENDIX 2 premium income limit control was switched from ‘net’ (after reinsurance) to gross under- writing. To compensate for this, the minimum deposit fell to 20 per cent of OPL from 1988; OPL was 2.5 times the amount of wealth shown. From 1990, a new requirement of 30 per cent of OPL relating to all Funds at Lloyd’s (FAL) was introduced, including deposits, Personal Reserves and Special Reserves. From 1998, the minimum FAL ratio was 40 per cent, although Individual Names were able to hold FAL of 32.5 per cent of OPL, the balance (7.5 per cent) being covered by ‘other personal wealth’ (OPW), recognising that they had unlimited liability underwriting. The concept of OPW was dropped in 2006. Risk-based capital assessment was introduced for all members from 1998, subject to the minimum FAL ratio of 40 per cent. Minimum capital requirements for Lloyd’s corporate members were 50 per cent of OPL from 1994, until they were adjusted according to their underwriting risk profile from 1996 onwards. Source: extracted from various Lloyd’s market bulletins. APPENDIX 3: THE EVOLUTION OF LLOYD’S GOVERNANCE

The first Committee of Lloyd’s was formed in 1771. Before long, John Julius Angerstein, an energetic young immigrant born in St Petersburg into a family of German merchants, found new premises for a group who established a new Lloyd’s at the Royal Exchange. He soon became Chairman of Lloyd’s. The powers of the Committee were strengthened by the Lloyd’s Act of 1871. In 1908, after a fierce debate within the Committee, the principle of an audit of each underwriting account was established. In the wake of the 1923 failure of a Lloyd’s syndicate run by Stanley Harrison, the Chairman, Arthur Sturge per- suaded all underwriters to contribute so that Lloyd’s policies were honoured. Afterwards, financial guarantee business was prohibited and a central fund was set up in 1927 to protect policyholders in future.1 Lord Cromer, a former Barings banker and Governor of the Bank of England, chaired a committee that reported in 1969. Although Lloyd’s accepted many of his proposals for restoring growth, it fatefully decided not to publish his proposals for reform of the agency system. Several incidents in the late 1970s involved a breach of trust, including the long-running Savonita and Sasse sagas.2 These led the Committee to appoint a working party under the chairmanship of Sir Henry Fisher to consider the whole system of regulation at Lloyd’s. Fisher recommended a new Act of Parliament to give the Lloyd’s authorities much greater powers of supervision. Fisher also recommended that the constitution should better reflect the now much larger constituency of external Names. Names’ representation on the Council, he said, would assure them that their interests would be prop- erly looked after. He also saw a risk of a conflict of interest in brokers owning 336 APPENDIX 3 managing agents and recommended that brokers should sell them off, known as divestment. A number of Lloyd’s people – many brokers, Robert Hiscox, Bryan Kellet and others – made strenuous efforts to persuade Parliament that compulsory divestment was a sledgehammer to crack a nut and would have many adverse consequences, but Parliament insisted on it. The intense debate about the provi- sions in the Lloyd’s Act is fully reported in Godfrey Hodgson’s Lloyd’s of London: A Reputation at Risk, first published in 1984. The Bill gave Lloyd’s a new consti- tution and a much stronger ability to regulate the market; more controversially, it also conferred on the Society immunity from suit by its members. The 1982 Lloyd’s Act received Royal Assent in the summer. Soon after this, a major fraud was discovered, involving the theft of syn- dicate money by Peter Dixon and Peter Cameron Webb, later referred to as the PCW scandal. The Governor of the Bank of England, Gordon Richardson, per- suaded the Lloyd’s Chairman to accept the appointment of Ian Hay Davison as Lloyd’s new Chief Executive and Deputy Chairman. The new Council set about the process of reform with vigour. Despite much progress, in 1985, when the government decided to introduce a Financial Services Bill to reform the operation of the investment market, there were many calls for its scope to be extended to cover Lloyd’s as well. To resolve this ques- tion, the government appointed a committee of enquiry, headed by Sir Patrick Neill. The Neill Committee came down in favour of Lloyd’s continuing to be re- sponsible for supervising its own marketplace. However, it set out an ongoing obligation to achieve a level of protection for its Names that was equivalent to the new investor protection regime elsewhere, making 70 recommendations for further reform. In a report entitled ‘Neill Lets Lloyd’s Off the Hook’ published on 24 January 1987, The Economist said that Neill had sidestepped some of the biggest issues that he was asked to address: while some of his recommendations were for sensible and much-needed reforms, he made ‘a powerful case against the self-regulation that he did not seek to change’. Neill was impressed by the contributions of the independent nominated members, but felt that the ‘balance of initiative rests too much with the working members’. He recommended more of the first at the expense of the second. This was immediately accepted by Lloyd’s: its Chairman, Peter Miller, lost no time in inviting the resignations of four working members. The composition before and after the Neill Report is shown below. APPENDIX 3 337

Lloyd’s Supervision and Governance (1983–92) Department of Trade & Pre- Post- Other national The Council Of Lloyd’s Industry Neill Neill supervisors (UK supervisor) Nominated members 48 (including the chied Executive) Elected external members 8 8

Elected working members 16 12 (Comprising the Committee of LIoyd’s)

Total 28 28 Main Subcommittees

Solvency External Investigati and Audit Finance relations ons security

Accounting Senior LIoyd’s Names and auditing Appoint- Training Disciplinary Property Advisory standards ments Commitees Panel

The Lloyd’s task force recommended the creation of a separate market board, retaining a regulatory Council. The Morse Committee developed this idea into a tripartite structure, with separate market and regulatory boards, overseen by the Council. These new boards were introduced in 1993. The com- position was slightly modified later by the Sheldon report, when the director of regulation ceased to be a Council post.

Lloyd’s Governance Structure (1993–2002) Department of trade and Industry The Council of Lloyd’s Other national (UK supervision) Six Nominated members supervisors (including the Chairman of LRB, Chief Executive and Director of Regulation)

Six Elected external members*

Six Elected working members (comprising the Committee of LIoyd’s including the Chairman of LIoyd’s and two Deputies)

LIoyds Market Board LIoyds Regulatory Board • Elected working members of • Elected external members of Council Council • Appointed on recommendations • Nominated members of council of market associations • Appointed working members • Corporation executives • Corporation executives • Appointed external members Remit: to ensure compliance with Remit: to drive forward the external regulatirs and to protect business of LIoyd’s interests of members

*including corporate members representatives from 1995 onwards 338 APPENDIX 3

The cast of characters at p. 347 below shows the chairmen and deputy chairmen of Lloyd’s and some of those who served on the Council. A fuller list of Council and Board members is given below.

Lloyd’s Council Members (various terms during 1990–6) excluding chairmen, deputy chairmen and chief executives

Nominated (independent) Elected external members Elected working members members

Patrick Egan Jonathon Agnew Paul Archard Sir John Fretwell GCMG Dr Mary Archer Simon Arnold Brian Garraway (LRB Sir Nicholas Bonsor Michael Cockell Chairman) Marie-Louise Burrows Harry Dobinson Brandon Gough Michael Deeny Anthony Hines Sir Alan Hardcastle (LRB Lady Rona Delves Broughton Brian Kellett Chairman) Gordon Dunlop CBE Robert Keville Robert Hewes Mark Farrer Graham McKean Sir Maurice Hodgson David James CBE Michael Wade Anthony Isaacs Lord Kimball Philip Wroughton Sir Jeremy Morse KCMG Christopher Messer Robert Owen Peter Nutting Matthew Patient Nicholas Pawson Brian Pomeroy Sir Gerrard Peat KCVO Mark Sheldon Valerie Robinson David Walker Sir Peter Viggers MP John Young

Other (non-Council) non-executive members of the LMB (1993–6)

Andrew Beazely Malcolm McKenzie Nicholas Pawson Mark Brockbank Tony Medniuk Terry Pitron Alan Colls Paul Myners Colin Spreckley Richard Lewy David Newbigging OBE Colin White

Other (non-Council) non-executive members of the LRB (1993–6)

Julian Avery Anthony Howland-Jackson Ralph Sharp Stephen Burnhope George Lloyd-Roberts John Townsend APPENDIX 3 339

Lloyd’s directors (group heads until 1993) 1990–6

William Beckett CB David Gittings Geoff Morgan Joe Bradley Stephen Hall Brian Nicholson Andy Coppell Bob Hewes Jo Rickard Andrew Duguid Heidi Hutter Michael Taylor John Gaynor Peter Lane Bob Woodford Rosalind Gilmore CB John Mallinson APPENDIX 4: LLOYD’S GLOBAL RESULTS FOR THE 1980–97 YEARS OF ACCOUNT

Investments Underwriting Result Gross Investment Net Total Overall investment appreciation deterioration underwriting result after income (£ m) (£ m) on earlier result less personal Year of years (£ m)** expenses, etc. expenses account* (£ m) (£ m) 1980 133 281 N/A –61 353 1981 151 213 N/A –116 248 1982 183 314 N/A –335 162 1983 168 299 –185 –347 120 1984 265 274 –73 –261 278 1985 304 155 –178 –264 195 1986 429 121 –195 99 649 1987 608 188 –425 –287 509 1988 615 173 –577 –1,298 –510 1989 555 181 –396 –2,799 –2,063 1990 591 155 –925 –3,065 –2,319 1991 579 136 –961 –2,763 –2,048 1992 655 –193 –836 –1,655 –1,193 1993 835 110 –859 –720 225 1994 515 –16 82 596 1,095 1995 593 6 144 550 1,149 1996 528 54 247 24 606 1997 489 –99 211 –599 –209 APPENDIX 4 341

* Result shown at close of year of account, e.g., 1980 year of account at 31 December 1982. Includes impact of prior year movements. Results for 1990–92 are shown net of adjustment for members’ related insurances, e.g., stop loss policies written by other Lloyd’s syndicates. ** Net deterioration on earlier years for 1983–6 only reflects movements on run-off years of account. The figures for 1987 and subsequent years include both movements on run-off years of account and reserves in respect of earlier closed years of account, i.e., all prior year movements. A positive figure indicates a net release. Source: Lloyd’s Global Results/Statistics Relating to Lloyd’s 2013 APPENDIX 5: ALTERNATIVE ANALYSES

On the basis of Freshfields’ legal advice, CEO Ron Sandler informed members’ agents in a letter of 28 November 1995 of the Council’s considered position: ‘The Council remains convinced that the alternative of Lloyd’s being put into run-off would inflict severe damage on all categories of members and would not result in members being able to avoid their liabilities.’ A document sent to all Lloyd’s members in January 1996 contained Freshfields’ analysis of the implications of a run-off. It covered the Council’s duties, emphasising duties towards policyholders, the ‘going concern’ assump- tion, the role of the central fund, the effects of ceasing to trade, some commer- cial consequences and the position of American policyholders. Its conclusion was that Names could not evade the duties of Lloyd’s, the DTI and overseas regulators to protect the interests of policyholders. It also said that without the reconstruction, there would be no assistance to Names in meeting their liabili- ties, no fair and speedy settlement of litigation and no exit through an RITC by Equitas. The document also contained a letter from the DTI explaining its response to the LNAWP alternative view, which is summarised below. It said that in the DTI’s experience, ‘the very act of going into run-off could lead to a rapid crys- tallisation of claims’. This would set in motion a breach of solvency require- ments and a failure of reinsurance, leading to a requirement for a plan to restore a sound financial position. It contained various other criticisms of the LNAWP analysis. The document also contained a letter from the Janson Green Action Group containing various criticisms, including the statement: ‘Thousands more Names could be faced with bankruptcy if Lloyd’s goes into run-off than if Equitas is established and Lloyd’s remains solvent.’ APPENDIX 5 343

THE LNAWP ALTERNATIVE

Lloyd’s: The Alternative to Reconstruction and Renewal was published in December 1995 as a discussion paper by the LNAWP. It was largely written by Christopher Stockwell. Its main points are summarised below. The document argued that instead of crystallising cash requirements, the existing Society and all its syndicates should be put into an orderly run-off. The ongoing and profitable underwriting business would continue in new entities, which could combine forces with the London company market, achieving big savings in common processing. Names who wished to continue underwriting would be guaranteed capacity in the new entities. The elaborate process of debt credits could be ditched. The settlement pot should be increased and within it around £300 million should be used as a safety net to ensure that all Names would be left with an acceptable standard of living. The DTI should not need to intervene because an orderly run-off could be achieved within the framework of the Insurance Companies Act 1982; ‘Old Lloyd’s’ would not write any new business. The LNAWP argued that this alternative solution should allow the London market to become a more competitive provider of insurance. There would be major cost savings, with significant loss of employment; the authors expected this to provoke a chorus of protest, as much of the elaborate structure of mem- bers’ agents, managing agents and the central Corporation would not be needed. The Lloyd’s community would suffer a drastic slimming down, ‘as with the rationalisation of any industry that has become inefficient and obsolete’. The Council and management of Lloyd’s could be reorganised, in keeping with their more limited role. Council members should resign, followed by fresh elections. The document said that the solvency of individual Names would be im- proved by eliminating double count and by not requiring Equitas premiums in 1996. Cash would only be called when needed to pay claims. Lloyd’s had said that it would be difficult to collect money from Names in the event of Equitas fail- ing; this was equally true in the event of the failure of the Society. Policyholders would have a powerful incentive to agree commuted settlements, intensified by the US requirements for reinsureds to reserve in full for their claims on Lloyd’s if it were in run-off. This could reduce the costs to Names significantly. Existing reserves should last 15 years. By contrast, creating Equitas would send a mes- sage to policyholders that reserves were adequate for all future claims, thereby ending pressure to commute. The new future businesses, comprising small insurance companies, could be supervised by a completely separate Market Board. Most of the assets of the Society, including the central fund and proceeds from the sale of property, 344 APPENDIX 5 would be used to settle the litigation. Contrasting its proposals with the R&R plan, the LNAWP acknowledged that it was impossible for anyone to say with certainty which was better. The uncertainties would take many years to resolve. Lloyd’s had stated that there would be no further cash calls with Equitas; this was because all the cash would be called up-front. The document said (incor- rectly) that a solvency margin for Equitas of around 16 per cent of assets over liabilities would be needed. There were also major tax inefficiencies involved in crystallising losses through Equitas. Under the alternative, cash would not be called until it was needed to pay claims. Lloyd’s’ proposals for the governance of Equitas gave negligible influence to Names. Under the LNAWP alternative, Names would retain control. A postscript to the LNAWP paper considered the pros and cons of contin- uing to underwrite in 1996. It suggested that this was unwise: the insurance cycle had turned down; rates were tumbling under strong competitive pres- sures; agents had no professional indemnity cover; the estate protection plan was now expensive with large excesses; PSL policies were inadequate and could not be relied upon; more capital was now needed to underwrite in the US; and until the final cost of Equitas was known, it seemed unwise to increase one’s exposure to further loss.

THE VALIDATION STEERING GROUP (VSG)

To meet demands for an independent view on alternative courses, the VSG was established. Sir David Berriman, Chairman of the ALM, chaired the group. Other members were Damon de Laszlo (representing the LNC) and Alan Porter (representing the LNAWP). Slaughter and May was appointed as legal advisers.

VSG terms of reference

I An examination of the Council’s duties and responsibilities in constructing its reconstruction and renewal proposals, including those owed to different categories of members (including contin- uing and the non-underwriting members) and to policyholders. II An evaluation of the comparative advantages and disadvantages of alternatives to R&R, including those involving the closure/run-off of ‘old Lloyd’s’. III A review of the Council’s powers to implement R&R, including its ability to make the appropriate byelaws. APPENDIX 5 345

Lloyd’s was to pay 80 per cent of the costs, with the balance being paid by the ALM, the LNC and the LNAWP.

The VSG report Slaughter and May’s report reviewed the R&R proposal and identified the key issues. It summarised the Council’s powers, duties and responsibilities, and considered issues surrounding finality and Equitas. It then analysed the alter- natives to R&R. The report made several specific recommendations about the R&R package:

● the need for adequate provision for ‘proportionate cover’ (described in Chapter 8); ● the need for reports from professionals similar to a prospectus about the viability of Equitas; ● the need for procedures for the election of directors of Equitas to convince Names that the board would be answerable to them; ● Lioncover’s liabilities should not be reinsured into Equitas while the present legal disputes over reinsurance remain unresolved; ● the most important issue to Names was an increase in the £2.8 bil- lion settlement fund, as had been recommended by the NC.

The report said that the issue of greatest importance to Names was an increase in the £2.8 billion settlement offer. It reminded readers of the LNC’s detailed proposals about how an increase could be achieved. The report’s overall view is given on p. 262. Its principal conclusions were that if R&R were to fail, it was unlikely that Lloyd’s would be able to continue as at present no credible alternative was likely to enable it to continue, and that if Lloyd’s ceased to carry on business, it was unlikely that any section of the Lloyd’s community would be better off. It did not recommend that Names should accept the settlement offer, regarding it as a commercial decision for each Name. APPENDIX 6: THE CHANGING CAPITAL STRUCTURE AT LLOYD’S 1994–2013

100% 90%

y

t

i

c 80%

a

p

a 70%

C 60% e

t

a r 50%

o

p r 40%

o

C

l 30%

l

a r 20%

e

v

O 10% 0% 2011 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2012 2014 Dedicated Spread

The changing pattern of corporate capacity at Lloyd’s Note: the total corporate capacity figures reconcile to the figures published in Statistics Relating to Lloyd’s and have been prepared on the following basis: • capacity is based on No. 12 stamp for each year (excluding deceased, suspended, resigned members); • the figures are given in £GBP as at each year end; no adjustment has been made for indexation; • ‘Dedicated’ = corporate members with participations on only one syndicate (this defini- tion of ‘dedicated’ may vary from other definitions given by Lloyd’s); • ‘Spread’ = corporate members with participations on more than one syndicate. The categories above should not be confused with ‘Aligned’ and ‘Non-Aligned’ corporate vehicles, which are slightly different. Source: chart and note provided by Lloyd’s KEY CHARACTERS, FIRMS AND INSTITUTIONS

Lloyd’s

Chairmen of Lloyd’s 1981–2013 Sir Peter Green (1979–83) David Coleridge (1991–2) Sax Riley (2001–2) Sir Peter Miller (1984–7) Sir David Rowland (1993–7) Lord Levene (2003–11) Murray Lawrence (1988–90) Max Taylor (1998–2000) John Nelson (2011–) Lloyd’s Chief Executives 1983–2013 Ian Hay Davison Peter Middleton Nick Prettejohn (1983–5) (1992–5) (1999–2006) Alan Lord CB (1985–92) Ron Sandler (1995–9) Richard Ward (2006 –13) Deputy Chairmen of Lloyd’s (1993–7) Stephen Merrett (1993) John Stace (1995–6) Robert Hiscox (1993–5) John Charman (1996–7) Richard Keeling (1993–4) Key members of the Lloyd’s Council*

Nominated (independent) Elected working Elected external members members members Brian Garraway (LRB Chairman) Jonathan Agnew Paul Archard Sir Alan Hardcastle (LRB Dr Mary Archer Michael Cockell Chairman) Sir Jeremy Morse KCMG Lady Rona Delves Broughton Brian Kellett Sir David Walker David James CBE Michael Wade Key Lloyd’s Corporation executives Joe Bradley, MD, Central Peter Lane, Director, Jo Rickard, Director, Services Unit Marketing Legal Services *A full list is available in Appendix 3 348 KEY CHARACTERS, FIRMS AND INSTITUTIONS

Andrew Duguid, Director, Philip Holden, Head, Gill Wilson, Lloyd’s Policy & Planning Financial Recovery Helpline Bob Hewes, Director, Finance Heidi Hutter, Director, Equitas Rosalind Gilmore, Director, Regulation Peter Hill, Head of David Gittings, Director, Communications Regulation Other key market practitioners Andrew Beazley Mark Brockbank Tony Jones

Equitas Claims Equitas Chairmen Equitas CEOs Directors

David Newbigging OBE (1996–8) Michael Crall (1996–2003) Glenn Brace Hugh Stevenson (1998–2008) Scott Moser (2003–7) Scott Moser Jane Barker (2007–, CFO David Shipley (2009–) 1996–2007) Jim Teff Association of Lloyd’s Members Chairmen and Deputies

Tom Benyon (1983–5) Neil Shaw (1992–3) Peter Morgan (2009–12) Raymond Nottage (Deputy Sir Adam Ridley (Deputy Chairman) Chairman 1994–) Anthony Haynes (1986–90) Sir David Berriman (1993–8) Mark Farrer (1991–2) Michael Deeny (1998–2009) Main Action Group Leaders Marie-Louise Burrows Damon de Laszlo Alan Porter Michael Deeny John Mays Richard Spooner Christopher Stockwell Alfred Doll-Steinberg Christopher Messer (LNAWP) Colin Hook Peter Nutting

Key advisers to Lloyd’s

Management Consultants Investment Bankers Actuaries

McKinsey JP Morgan Tillinghast Towers Perrin Bronek Masojada Richard Johnston John Ryan Alan Morgan Lazards PR Consultants Charles Roxburgh David Anderson Maitland Consultancy Peter Sands David Verey Kekst & Co Mercers Rothschilds Fields Wicker Richard Davy KEY CHARACTERS, FIRMS AND INSTITUTIONS 349

Key legal advisers

To Lloyd’s To Names To Equitas

Simmons & Simmons Richards Butler (Outhwaite and Feltrim) Freshfields Freshfields Graham Nicholson Barry O’Brien Wilde Sapte (Gooda Walker) Philip Rocher LeBoeufs Don Greene Slaughter and May (Validation (Senior Partner) Steering Group) Peter Demmerle Charles Landgraf Jeff Mace Fried Frank Harvey Pitt Queen’s Counsel Jonathan Sumption QC Anthony Boswood QC Anthony Grabiner QC Geoffrey Vos QC Berkshire Hathaway Warren Buffet (Chairman and CEO) Ajit Jain 350 KEY CHARACTERS, FIRMS AND INSTITUTIONS

Regulators

Department of Trade & Industry Rt Hon Michael Heseltine PC MP President of the Board of Trade, Secretary of State for Trade and Industry Anthony Nelson MP, Minister of State Neil Hamilton MP, Parliamentary Undersecretary of State Dr Jonathan Spencer CB, Under Secretary, Later Director General Richard Hobbs, Assistant Secretary

Government Actuary’s Department Chris Daykin, Government Actuary

Bank of England Eddie George, Governor

New York Insurance Department Ed Muhl, Superintendent, Vincent Laurenzano, Deputy Superintendent and Chief Examiner

California Insurance Department Chuck Quackenbush, Insurance Director

Colorado State Securities Department Philip Feigin, Commissioner

European Commission Commissioner Fritz Bolkestein John Mogg, Director-General, DGXV (Internal Market and Financial Services) David Deacon, Head of Insurance Unit, DGXV KEY CHARACTERS, FIRMS AND INSTITUTIONS 351

Other key institutions

The English judiciary

The High Court Court of Appeal The House of Lords

The American judiciary

State Courts Federal District Courts Federal Appeal Circuits

People’s representatives

Parliament US Congress European Parliament CHRONOLOGY OF KEY EVENTS

THE EARLIER HISTORY OF LLOYD’S

1688 Trading begins in Lloyd’s coffee house 1769 Professional underwriters establish new Lloyd’s 1771 First Committee of Lloyd’s elected 1871 Lloyd’s incorporated by Act of Parliament 1906 San Francisco earthquake claims met, establishing the reputation of Lloyd’s in the US 1927 Lloyd’s central guarantee fund established 1939 Lloyd’s American Trust Fund established 1965 Hurricane Betsy produces first overall losses 1968 Non-British members introduced 1969 Cromer report received; women members introduced 1980 Fisher report published; new Lloyd’s legislation sought 1982 Neville Russell letter seeks guidance on treatment of old liabilities 1982 Lloyd’s Act 1982 receives Royal Assent 1982 PCW scandal uncovered 1983 Lloyd’s Council begins; first Chief Executive, Ian Hay Davison, appointed 1986 Queen Elizabeth II opens Lloyd’s new building 1987 DTI-appointed Neill Report published; PCW settled

EVENTS LEADING TO THE RECONSTRUCTION OF LLOYD’S

1991 Jan Lloyd’s task force appointed Aug Loss reviews begin CHRONOLOGY 353

1992 Jan Lloyd’s task force report published Feb Outhwaite settlement agreed July Morse and Walker reports published July David Rowland accepts Chairmanship for 1993 Sept Peter Middleton appointed Lloyd’s CEO 1993 Jan Lloyd’s Market Board and Regulatory Board established Apr Lloyd’s business plan published Sept Guide to corporate capital published Oct Equitas project established 1994 Jan First corporate members join Lloyd’s Feb First settlement offer fails Oct Gooda Walker Action Group wins judgment 1995 Mar Feltrim Action Group wins judgment May R&R plan published; NYID report published June Parliament’s TSC Committee report published June Names’ Committee established to advise on allocation of settlement funds Oct Merrett Action Group wins judgment against agents and auditors Nov Peter Middleton resigns; Ron Sandler appointed CEO Dec US state securities regulators take administrative and/or court action 1996 Feb Sale and leaseback of Lloyd’s 1986 building Feb Lloyd’s proposals for allocating the settlement funds published Mar Indicative statements sent to each Lloyd’s member; DTI conditionally authorises Equitas Apr Independent validation steering group report published on alternatives to R&R May Clementson judgment in favour of Lloyd’s June Second indicative statements sent to members; Settlement Information Document published July Agreement reached with US state securities regulators July General meetings overwhelmingly approve R&R proposals July Settlement Offer Document published July Court of Appeal ruling in favour of Lloyd’s in PTD litigation Aug Paying Names Action Group lose judicial review Aug Fourth Circuit Federal Court of Appeal in Baltimore reverses injunction to prevent R&R Sept Settlement offer declared unconditional; DTI authorises Equitas, which reinsures all Names 354 CHRONOLOGY

AFTERMATH

Mar 1999 House of Lords holds PTD amendments valid Nov 2000 Lloyd’s wins Jaffray fraud trial Dec 2001 Financial Services Authority starts regulating Lloyd’s Jan 2003 Lloyd’s Franchise Board established Apr 2007 Berkshire Hathaway subsidiary, National Indemnity, reinsures Equitas July 2009 English High Court approves transfer of Names’ liabilities to Berkshire Hathaway subsidiary, EIL GLOSSARY OF TERMS

Active underwriter: the person employed by a managing agent with authority to accept risks on behalf of a syndicate. Agency agreement: the standard form agreement made between a member of a syndicate and the syndicate’s managing agent that confers underwriting and other authorities, powers and discretion on the managing agent. Bond-washing: a tax avoidance device whereby government bonds were sold just before coupons were due to crystallise, then repurchased at a lower price once the coupon was paid, creating a capital gain that was subject to a lower rate of tax than income. Byelaw: a byelaw made by the Council under the Lloyd’s Act 1982. Central fund: the fund maintained pursuant to the central fund byelaw which operates, inter alia, as a fund of last resort for the protection of policyholders in the event of a member being unable to meet his liabilities. Centrewrite: an insurance company, established as a wholly owned subsidiary of Lloyd’s in 1991, to reinsure run-off years of account and underwrite estate protection policies. Claims made: a policy wording under which a claim is valid only if made dur- ing the period of the policy, in contrast with an ‘occurrence’ form, which pro- vides cover of losses occurring during the policy period, regardless of when a claim is actually made. Closed year: a year of account for which the financial outcome has been deter- mined, following reinsurance to close. Debt credits: credits available to Names as part of the settlement process for use against Lloyd’s liabilities, including ‘finality’ bills. 356 GLOSSARY OF TERMS

Discounting: a process that enables an insurer to take into account the time value of money when setting reserves. The insurer estimates the likely payment pattern of claims and then discounts the liabilities to take account of the returns achievable on assets invested to meet those claims. The discount can then be reflected in the value of the assets dedicated to cover the claims.

Errors and omissions (E&O) insurance cover: insurance covering members’ and managing agents’ liabilities for errors and omissions.

Excess of Loss (XL): an insurance policy which provides protection above an agreed limit.

Hardship scheme: a scheme established to help members who demonstrated that they were unable to meet their Lloyd’s losses.

High-Level Stop Loss Fund (HLSL): a discretionary fund established by a byelaw against which eligible members may lodge a claim in respect of losses above a threshold level.

Incurred but not reported losses (IBNR): the reserve set aside for claims which the underwriter expects, but which have not yet been formally reported.

Lioncover: the insurance company formed in 1987 to reinsure the liabilities of certain Lloyd’s syndicates.

Long tail: a term used to describe insurance contracts under the terms of which claims may be made many years after the date on which the contract was writ- ten (e.g., asbestos and environmental pollution claims).

Managing agent: an underwriting agent responsible for managing a syndicate and, amongst other things, employing the active underwriter.

MAPA: an administrative arrangement under which a members’ agent pools underwriting capacity and the participating members share rateably in partici- pations across a spread of syndicates.

Members’ agent: an underwriting agent responsible for advising members on syndicate selection and administering Lloyd’s members’ affairs.

Name: an individual member of Lloyd’s.

Open year: a year of account which has not been reinsured to close. The expres- sion includes a run-off account. GLOSSARY OF TERMS 357

Personal Stop Loss (PSL): policies purchased by members to protect themselves against losses at Lloyd’s. PSL policies are structured as excess of loss contracts, which cover a layer of losses in excess of a self-insured retention. Premium: a sum of money paid by the purchaser of insurance to the insurer. Premium Trust Funds: trust funds into which all premiums received by a member, or by managing agents on behalf of a member, must be placed, and which are available for the payment of reinsurance premiums, claims and syn- dicate and other expenses and, when the year of account has been closed, profits to members. They are governed by Premium Trust Deeds. Retrocession: the insurance of a reinsurer – a type of policy in which reinsurers lay off all or part of their risk to another reinsurer, known as a retrocessionaire. Reinsurance to close (RITC): a reinsurance agreement under which under- writing members who are members of a syndicate for a year of account to be closed are reinsured by underwriting members who comprise that or another syndicate for a later year of account, or by an insurance company designated by the Council, against all liabilities arising out of insurance business under- written by the reinsured syndicate. Rollover: a tax avoidance device for building profits offshore through a con- trived reinsurance policy, often without a genuine transfer of risk. If there were no claims, the premiums, together with interest, were rolled over to the follow- ing year. The Room: the shorthand description used at Lloyd’s to describe the under- writing floor where trading takes place. Run-off account: a year of account of a syndicate which was not closed at its usual date for closure by reinsurance to close and which has yet to be so closed. Slip: the paper prepared by the broker outlining a risk, which the underwriter accepts by marking the percentage share he will accept with his initials. Solvency test: an annual statutory test as at 31 December in each year in two parts. Under the global test, members of Lloyd’s taken together are required to maintain a minimum margin of solvency, being the excess of the value of assets over the amount of liabilities. Under the individual tests, each member’s assets and liabilities are audited and the audit certificate states whether those assets are adequate to meet the member’s liabilities. Syndicate: a group of members for whose account an active underwriter accepts insurance business at Lloyd’s. 358 GLOSSARY OF TERMS

Three-year accounting cycle: a method of accounting under which the results of underwriting in any year are not determined until a further two years have elapsed, with distribution of profits following reinsurance to close. Tort law reform: proposed changes in common law civil justice systems that aim to reduce tort litigation and the size of resulting damages. Tort actions are civil common law claims for compensating wrongs and harms done by one party to another. In the US, tort reform is a contentious political issue. Uberrima fides (utmost good faith): the legal principle whereby both parties to a contract of insurance have a duty to reveal all facts that may have a bearing on the policy. NOTES

1 INSIDE OUT

1 The last semi-official history of Lloyd’s, by D.E.W. Gibb, first published in 1957, was subtitled A Study in Individualism. 2 Reinsurance can cover a particular contract or the whole of a syndicate’s business. It can cover a share of any losses or all losses above a certain level. 3 Source: Statistics Relating to Lloyd’s. 4 Appendix 1 shows the ten largest participants in each category and the changing position among Lloyd’s syndicates, agents and brokers. 5 In the 1980s, a typical risk was ‘subscribed’ by, say, a dozen following syndicates, and often more. Lloyd’s (and London) is described as a subscription market because of this practice of sharing risks. 6 The legal principle is known as uberrima fides – utmost good faith. 7 In Britain, private schools are called ‘public schools’ for historical reasons. 8 See Appendix 1. 9 A note on this legislation in available at www.onthebrink.uk.com. 10 See Appendix 3, p. 336. 11 The top ten brokers are given in Appendix 1. 12 See Appendix 2. 13 The composition of overseas membership is available at www.onthebrink.uk.com. 14 Interview with the author, April 2013. 15 Source: Statistics Relating to Lloyd’s. 16 Interview with the author, October 2012. 17 The top ten members’ agents in 1986 are given in Appendix 1. 18 An early version of the form is available at www.onthebrink.uk.com. 19 A summary is available at www.onthebrink.uk.com. 20 Overseas members were always interviewed one at a time. As membership boomed, to save time, the practice grew of seeing several prospective British members in a small group. By 1987, around half of the new Names were interviewed in this way. 21 This is explained on p. 34. 22 A note with examples of liabilities can be found at www.onthebrink.uk.com. 23 ‘His’ is used here and afterwards for convenience; plenty of Names were women. It is not intended to be gender-specific. 24 Sometimes managing and members agents were part of the same group. 25 Membership: The Financial Requirements. 26 A brief description of the Sasse affair is available at www.onthebrink.uk.com. 27 The author joined Lloyd’s in December 1986, having been headhunted from the DTI. 28 Lloyd’s insurance policies were prepared by the broker, because many syndicates were involved. 29 The non-marine and aviation markets had similar claims offices that were owned by the syndicates that used them. Merging all three in 1991 was controversial. 360 NOTES

30 Appointed by Lloyd’s, its report was entitled Self-Regulation at Lloyd’s. 31 Appointed by the Secretary of State for Trade and Industry, its report was entitled Regulatory Arrangements at Lloyd’s. 32 These sagas are described in detail in Godfrey Hodgson’s excellent book: Lloyd’s of London: A Reputation at Risk (1984). 33 Its full name is LeBoeuf, Leiby Lamb and Macrae. 34 See Glossary. 35 See Glossary. 36 See www.onthebrink.uk.com. 37 Kenneth Powell, Lloyd’s Building (1994).

2 HIDDEN TRAINS

1 See p. 336. A further note is available at www.onthebrink.uk.com. 2 See p. 8 and Appendix 3. 3 Paul Brodeur, Outrageous Miscounduct: The Asbestos Industry on Trial (1985). 4 Adam Raphael, Ultimate Risk: The Inside Story of the Lloyd’s Catastrophe (1994). 5 Ibid., p. 101. 6 Newsletter produced by the ALM. 7 Robert Kiln, Predictions on Lloyd’s and Reinsurance 1968–1993 (1997), p. 152. 8 The growth of open years is available at www.onthebrink.uk.com. 9 In the insurance world, this event is called 87J. 10 See p. 17. 11 IIL speech, delivered at a London insurance seminar, April 1988. 12 Chatset, August 1994. 13 Interview with the author, May 2013. 14 Source: Statistics Relating to Lloyd’s. 15 Available at www.onthebrink.uk.com. 16 Available at www.onthebrink.uk.com. 17 Described at www.onthebrink.uk.com. 18 Described on pp. 25 and 335. 19 Described on p. 336. 20 The top rate of tax on unearned income had fallen from 98 per cent in 1978 to 40 per cent in 1988, with the abolition of the investment income surcharge in 1984, and the two big cuts in the top rate of income tax from 75 per cent to 60 per cent in 1979, then to 40 per cent in 1988. The incentive to convert gains into capital appreciation had disappeared, as the ‘bond-washing’ loophole had been ended. Furthermore, capital gains were now taxed as the top slice of income, up to 40 per cent, in- stead of a fixed rate of 30 per cent. 21 A reference to the Sasse and PCW cases. 22 Available at www.onthebrink.uk.com. 23 See p. 37. 24 See www.onthebrink.uk.com. 25 Council minutes, 1 February 1989. 26 See Figure 1.2 on p. 11. 27 Council minutes, 10 May 1989. 28 See www.onthebrink.uk.com. 29 See p. 336. 30 Interview with the author, May 2012. 31 The retired head of the UK subsidiary of Munich Re. 32 Witness statement in the subsequent Jaffray fraud trial in 2000. 33 See p. 46. 34 Lloyd’s Newsletter, June 1990. 35 Available at www.onthebrink.uk.com. 36 See Appendix 4. NOTES 361

3 ALARM BELLS

1 See Figure 1.2 on p. 11. 2 The Terms of Reference and membership of the Lloyd’s task force are available at www.onthebrink. uk.com, together with a fuller account of this sequence of events. 3 Evening Standard, 1 June 1991. 4 Ibid. 5 Ibid. 6 The Guardian, 20 June 1991. 7 Sunday Times, 23 June 1991. 8 A list of them is available at www.onthebrink.uk.com. 9 More material on this and the following year’s meetings is available at www.onthebrink.uk.com. 10 See Appendix 4. 11 US bankruptcy laws vary from state to state; some exempt the primary residence. 12 Proskaur, Rose, Goetz & Mendlesohn. 13 Racketeer Influenced and Corrupt Organizations Act. 14 See p. 34. 15 For Whom the Bell Tolls, p. 334. 16 Predecessor of the FSA. 17 Interview with the author, 2012. 18 The Independent, 27 May 1992. 19 Violet Elizabeth Bott, a character in Richmal Crompton’s Just William books. 20 Mantle, For Whom The Bell Tolls, p. 347. 21 For Whom the Bell Tolls, p. 330. 22 Interview with the author, March 2013. 23 A note about this is available at www.onthebrink.uk.com. 24 A fuller note on issues raised at this meeting is available at www.onthebrink.uk.com. 25 The new structure is described in Appendix 3. 26 FT, 3 July 1992. 27 The highlights of the debate and the text of the resolutions are available at www.onthebrink. uk.com. 28 See Appendix 4. 29 The Observer, 16 August 1992. 30 The Times, 10 September 1992. 31 The Times, 15 September 1992. 32 The Times, 9 October 1992. 33 The Economist, 21 November 1992.

4 FRESH START

1 Strictly speaking, those from Tyneside are Geordies. Middleton was from nearby Teeside. 2 Although it was widely reported that Middleton had been a monk, and he did not correct this, a former school colleague wrote to The Times in April 2014 to say that Middleton had been ordained as a Catholic priest before spending five years in a Devon monastery. 3 Interview with the author, September 2013. 4 The previous publication (the Newsletter) had sometimes displayed insensitivity towards Names, containing much material about sporting and social events of interest to those who worked in the market. 5 See www.onthebrink.uk.com. 6 A note is available on this controversial claim at www.onthebrink.uk.com. 7 See Figure 2.1 on p. 43. 8 A list of this first crop of corporate members is available at www.onthebrink.uk.com. 9 A fuller note on his Lloyd’s career is available at www.onthebrink.uk.com. 10 Interview with the author, March 2012. 11 New Yorker , September 1993. 362 NOTES

12 BCCI collapsed in 1991 and its creditors launched a £1 billion claim against the Bank of England for regulatory failure; it claimed statutory immunity. 13 A note on hardship assistance is available at www.onthebrink.uk.com. 14 Tim Harford, Adapt: Why Success Always Starts with Failure (2012). 15 A fuller note on Hiscox’s Lloyd’s career is available at www.onthebrink.uk.com. 16 Interview with the author, July 2012. 17 The story behind Hiscox’s association with remarks about ‘sheep being made for fleecing’ is explained at www.onthebrink.uk.com. 18 This cut-off date marked the change in policy wordings at Lloyd’s away from the ‘occurrence’ form to the ‘claims made’ form, described on p. 33. 19 Reinsurance to close, described on p. 34. 20 This was because they did not believe they had exposure to pollution claims. 21 A note on the project structure is available at www.onthebrink.uk.com. 22 Interview with the author, July 2012. 23 More details about this case are available at www.onthebrink.uk.com. 24 A description is available at www.onthebrink.uk.com. 25 Lloyd’s List , 23 June 1993. 26 Arbuthnott v Fagan; Deeny v Gooda Walker Ltd [1995] CLC 1396. 27 The Lloyd’s Litigation: The Merrett, Gooda Walker and Feltrim Cases [1994] 2 Lloyd’s Rep 193. 28 See p. 119. 29 Details of this offer and some reactions to it are available at www.onthebrink.uk.com. 30 The Spectator, 1 January 1994. 31 These values are available at www.onthebrink.uk.com. 32 Terms of reference and composition are available at www.onthebrink.uk.com. 33 Interview with the author, January 1997. 34 A member’s right to sell or transfer his place on a syndicate. 35 Appendix 6 charts the changes in capital structure at Lloyd’s. 36 See Appendix 4. 37 Evening Standard , 11 August 1994.

5 THE CHASM

1 Letter to Peter Middleton in response to consultation on amending the PTDs, October 1995. 2 1995 Corporation annual report. 3 Letter of 14 November 1994 from the LNC to Names. 4 The Economist, 10 December 1994. 5 See p. 151. 6 OLS, June 1994. S ee p. 33.7 See p. 33.7 8 OLS , September 1994. 9 Interview with the author, 2012. 10 A summary is available at www.onthebrink.uk.com. 11 Interview with William Pitt, January 1997. 12 As reported in OLS, November 1994. 13 An explanation is available at www.onthebrink.uk.com. 14 A note on these pressures is available at www.onthebrink.uk.com. 15 Interview with the author, May 2013. 16 Michael Heseltine, Life in the Jungle (2000), p. 424. 17 Terms of reference and membership are available at www.onthebrink.uk.com. 18 OLS , May 1995. 19 Source: Statistics Relating to Lloyd’s. 20 A fuller note on the range of opinions is available at www.onthebrink.uk.com. 21 Treasury and Civil Service Committee, Fifth Report, HMSO, 1995. 22 Arbuthnott v Feltrim Underwriting Agencies Ltd [1995] CLC 437. NOTES 363

23 Deeny v Gooda Walker Ltd (No 3) [1995] 1 WLR 1206. 24 Sheldon v RHM Outhwaite (Underwriting Agencies) Ltd [1995] 2 Lloyd’s Rep 197. 25 Cox v Bankside Members Agency Ltd [1995] 2 Lloyd’s Rep 437.

6 LAST CHANCE

1 Interview with the author, August 2013. 2 See Appendix 4. The ‘deterioration’ in previous years, shown in column 3, largely comprised increased provision for such claims. 3 Interview with the author, August 2013. 4 Interview with the author, August 2013. 5 Interview with the author, August 2013. 6 This list of decisions is based on notes written by Roxburgh. 7 Available at www.onthebrink.uk.com. 8 Interview with William Pitt, January 1997. 9 R&R is explained on p. 197. 10 World Insurance Report, 5 May 1995. 11 Lloyd’s List, 28 April 1995. 12 FT, 29 April 1995. 13 A description of these options is available at www.onthebrink.uk.com. 14 Available at www.onthebrink.uk.com. 15 Sunday Times, 28 May 1995. 16 See p. 11. 17 A Lloyd’s underwriting agent with dubious reinsurance links to an offshore operation named Fidentia in Bermuda. 18 Angela Gillibrand, Finance Director of the Royal Military College of Science at Shrivenham, Richard Hartley QC and Desmond Hayward. 19 This term was first used as a description of Russians who were refused permission to emigrate by the Soviet authorities. Over time, it has entered colloquial English as term to describe a person who refuses to do something. 20 Source: NC interim report, November 1995. 21 Interview with the author, December 2012.

7 STRUGGLING

1 A note on these efforts is available at www.onthebrink.uk.com. 2 Interview with the author, September 2012. 3 Literally translated, ‘Taipan’ means ‘Big Boss’. Founded in 1832, nine years before Hong Kong itself, the Jardine Matheson Group had always called its Chairman/CEO the Taipan. 4 See Glossary. 5 Interview with the author, November 2012. 6 A note on the Superfund Commission’s composition and influence is available at www.onthebrink. uk.com. 7 Terms of reference are available at www.onthebrink.uk.com. 8 Lloyd’s: The Alternative to Reconstruction and Renewal. 9 Ron Sandler had replaced Peter Middleton when this picture was taken later in the year. 10 This is described in more detail at www.onthebrink.uk.com. 11 Henderson v Merrett Syndicates Ltd (No 2) [1997] LRLR 265. 12 Interview with the author, September 2013. 13 The Economist, 18 November 1995. 14 Interview with the author, December 2013. 15 A fuller note describing the value and purpose of the tranches is available at www.onthebrink. uk.com. 16 Source: Allocating the Settlement, Lloyd’s publication, February 1996. 364 NOTES

8 TIGHTROPE

1 See p. 266. 2 Marchant & Eliot Underwriting Ltd v Higgins [1996] 2 Lloyd’s Rep 31. 3 FT, 16 March 1996. 4 The Son, May 1996. 5 Napier and Ettrick and Another v R.F. Kershaw Ltd. Society of Lloyd’s and Others; Society of Lloyd’s v Woodard and Wilson [1997] LRLR 1. 6 Interview with the author, September 2012. 7 The project structure is explained at www.onthebrink.uk.com. 8 The parliamentary statement is available at www.onthebrink.uk.com. 9 See page 162. 10 Damon de Laszlo was leader of the Feltrim Names Association, an important action group, and a member of both the NC and the LNC. 11 This is summarised in Appendix 5. 12 See p. 152. 13 OLS, July 1996. 14 Speaking at the ALM conference, 13 July 1996. 15 Ordinary General Meeting, which was followed by an EGM. 16 R v Council of Lloyd’s ex parte Susan Rachel Johnson and Others (unreported). 17 Interview with the author, August 2013. 18 In Rowland’s case, the author.

9 AFTERMATH

1 Interview with the author, April 2013. 2 OLS, August 1997. 3 Society of Lloyd’s v Leighs; Society of Lloyd’s v Lyon; Society of Lloyd’s v Wilkinson [1997] CLC 1398. 4 OLS, March 1998. 5 Interview with the author, November 2012. 6 A description of these events is available at www.onthebrink.uk.com. 7 Interview with the author, March 2013. 8 OLS, January 1997. 9 Interview with the author, July 2012. 10 Interview with the author, September 2013. 11 This was signed by Rory Carvill, John Stace, Ralph Bailey and Graham McKean. 12 Interview with the author, July 2012. 13 See p. 87. 14 See Appendix 2. 15 Source: Statistics Relating to Lloyd’s. Individual members shown on this chart refer to those mem- bers of Lloyd’s underwriting on an unlimited liability basis only. Individuals underwriting on a limited liability basis, also described as private capital, are included under corporate members. 16 The Independent, 1 December 1998. 17 Christopher Stockwell’s witness statement for the Jaffray trial. 18 Society of Lloyd’s v Sir William Otho Jaffray BT, Official Transcript QBD (Comm) 2000-11-03/2000 WL 1629463. 19 The Guardian, 4 November 2000. 20 The Times, 4 November 2000. 21 Jaffray and Others v Society of Lloyd’s [2002] EWCA Civ 1101. 22 The Independent, 27 July 2002. 23 See p. 120. 24 Independent on Sunday, 2 October 2005. 25 Lloyd’s List, 1 March 2006. NOTES 365

26 Mail on Sunday, 5 November 2000. 27 Mail on Sunday, 19 November 2000. 28 Voodoo Histories: How Conspiracy Theory Has Shaped the Modern World (2010). 29 Lloyd’s’ current system of market supervision through a Franchise Board is beyond the scope of this book. It is described in annual reports which are available at www.lloyds.com. 30 Source: Statistics Relating to Lloyd’s. 31 Interview with the author, August 2013. 32 Interview with the author, August 2013. 33 Correpondence with the author, 4 December 2013. 34 Interview with the author, October 2013. 35 Interview with the author, April 2013. 36 Speech delivered on 13 June 2002. 37 Available at www.equitas.com. 38 For further details of this speech, see www.onthebrink.uk.com. 39 Interview with the author, September 2013. 40 A transfer of liabilities that can be achieved by agreement or by statute. 41 Source: Equitas annual reports. 42 Names at Lloyd’s, Re; Equitas Insurance Ltd, Re [2009] EWHC 1595 (Ch). 43 Legally there is still a residual liability for Names residing outside Europe, but the cover provided by Berkshire Hathaway looks strong enough and the risk sufficiently remote, that there has been little call for more legal battles to try and establish finality in these countries.

APPENDICES

1 D.E.W. Gibb, Lloyd’s of London: A Study in Individualism (1957), p. 265. 2 See Godfrey Hodgson, Lloyd’s of London: A Reputation at Risk, pp. 36 and 246, respectively. These are also outlined at www.onthebrink.uk.com. BIBLIOGRAPHY

A History of Lloyd’s C. Wright and C.E. Fayle, 1928 Lloyd’s of London: A Study in Individualism D.E.W. Gibb, 1957 Lloyd’s of London: A Reputation at Risk Godfrey Hodgson, 1986 A View of the Room: Lloyd’s Change and Disclosure Ian Hay Davison, 1987 Outrageous Misconduct: The Asbestos Industry on Trial Paul Brodeur, 1988 For Whom the Bell Tolls: The Lessons of Lloyd’s of London Jonathan Mantle, 1992 Ultimate Risk: The Inside Story of the Lloyd’s Catastrophe Adam Raphael, 1994 All That Glitters: The Fall of Barings John Gapper and Nicholas Denton, 1997 Predictions on Lloyd’s and Reinsurance 1968–1993 Robert Kiln, 1997

Life in the Jungle Michael Heseltine, 2000 The Truth about Markets John Kay, 2003 Fool’s Gold: How Unrestrained Greed Corrupted a Dream Gillian Tett, 2009 Voodoo Histories: How Conspiracy Theory Has Shaped Modern History David Aaronovitch, 2009 Whoops Jon Lanchester, 2010

The Big Short Michael Lewis, 2010 Adapt: Why Success Always Starts with Failure Tim Harford, 2012 INDEX

Note: f = figure; t = table. Page numbers in italic indicate an illustration or photograph Aaronovitch, David 302 Aragorn Syndicate (384) 91 Abbott, Diane 73, 170, 171, 172 arbitration and conciliation 22, 53, 63, accounting procedures 58–9, 302–3 74–5 action groups 23, 86, 88, 91, 124, 137–8, Arbuthnot, William 206 158, 317–18 Archard, Paul 56, 98, 100, 104, 347t appointment of Peter Middleton 104 Archer, Jeffrey 296 contact with members 112–13 Archer, Dr Mary 57, 127, 128–9, 151, 156, leadership 317–18 323, 324, 347t league tables 202 asbestos, 113, 132, 133, 156–7, 162, 172–3, long-tail Names 174–5 216, 296 main group leaders 348t background 32–3, 35, 36, 43, 49 Outhwaite action group 59–62, 65 continuing claims 309–11 actuaries 348t Asbestos Working Party (UK) 33, 59, 171 Adam Room 13, 14, 113, 213 Ashworth, Jon 104 Adapt (Harford) 130 Assistance and Recovery Committee Additional Securities Ltd (ASL) 160 (ARC) 239–40, 265 Additional Underwriting Agent 9 (AUA9) Association of British Insurers (ABI) 276 73, 97 Advertising Standards Authority Association of Lloyd’s Members (ASA) 158 (ALM) 16–17, 41, 42, 60, 68, 95, 104, advisers 116, 319–20, 348t, 349t 126, 170, 205, 240, 317 Agnew, Jonathan 124, 141, 166, 291, 347t action groups and 88 AIG 311 Chairmen and Deputies 348t Alaskan Supreme Court 308 Council of Lloyd’s 103 Alexander & Alexander 9 Michael Deeny as Chairman 291 Alexander Howden (broker) 9 ‘fi nality’ package 251, 268 ALM News 36, 51, 290 helpline 92 A.M. Best 292–3 leadership 99, 102 American Airlines 191 Names’ rights 263 American Names Association Reconstruction and Renewal (ANA) 176–7 (R&R) 200 Anderson, David 348t Settlement off ers 153, 154 Andrews, Stan 146 Task Force report 81, 83, 84, 85 Angerstein, John Julius 335 Atkins, Betty 55 Angerstein Underwriting Trust 117, 165 Atkins, Geoff 312 Annual General Meetings (AGMs) 42, 47, Atkins, Ralph 195 49, 58, 62, 63, 76, 96–7, 121, 145 AUA9 see Additional Underwriting Anton (members’ agent) 205 Agent 9 Appeal Tribunal 58 aviation insurance 20–1, 46 368 INDEX

Bagnall, Sarah 114 Bragg, Melvyn 71 Bailey, Ralph 256 Brebner, Martin 280 Bain (management consultants) 302 Breyer, Stephen 296 Baltic Exchange 94–5, 111 Brockbank, Mark 21, 143, 234, 235, 348t Bank of England 27, 127–8, 164, 194–5, Brockbank/Mid Ocean 235 218, 248, 326, 350t Brocket Hall 44, 45, 50–1 banking reforms (‘Big Bang’) 48–9 Brodeur, Paul 32 Bankruptcy Code (Section 304) (US) 189, 191 brokers 4, 6, 20–1, 22, 44, 243–4 Barclays 117 American 8–9, 48, 49 Barfield, Dick 306 reinsurance 38 Barker, Jane 215, 275–6, 280, 312, 318, 323, relationship with underwriters 9–10, 54 348t top ten Lloyd’s brokers 332t Barnes, Julian 127–9 see also underwriters Bartleet, Anthony 157 Brooke, Lord Justice 272, 298 Bass, Gary 156 Brooks & Dooley 205 Beale, Inga 323 Brown, Bill 38 Beaumont-Dark, Anthony 73 Brown, Jim 246 Beaver, Rosemary 248 Brown, Philip (‘PAR’) 161 Beazley, Andrew 10, 21, 143, 193, 302, 348t Buckingham, Lisa 61 Bell, Griffin 309, 310, 328 Buffett, Warren 311–12, 349t Bell, Tim 71 Burrows, Marie Louise 91, 118, 323, 324, Benyon, Tom 17, 53, 120, 126, 136, 227, 253, 348t 266, 317 Burson-Marsteller 142 action groups 71, 76, 85, 89, 348t Business in the Community (BiC) 103 Berkshire Hathaway (BH) 311, 312, 325, Business Issues Committee (BIC) 53–4, 349t 55–6, 64 Berriman, Sir David 153, 201, 266 Business Week 69 action groups 88, 89, 122, 240, 348t Buxton, Lord Justice 298 Settlement Agreement Review Group 271 Validation Steering Group (VSG) 221, California Earthquake Authority 231, 262, 317, 344 (CEA) 246–7 Bingham, Sir Thomas 137, 151, 177, 178 California Insurance Code 204 Blackburne, Mr Justice 313 California Insurance Department 246, Bledisloe, Viscount, QC 281 350t Bliley, Tom 284 Calleo, Victor 215 Bloxham, Edward 58 Cameron, Donald 16, 93 ‘Blue Book’ 53, 60 Camp, Mark 159, 160 ‘Blue Sky’ commissioners (US) 245 Canada 81, 94 Board of Trade (UK) 26, 161 Canadian Names Association 283 Boateng, Paul 73 capital 78, 129, 166–8, 233–5, 290–1, 292f Bolkestein, Commissioner Fritz 301, 350t capital structure 166, 302–3, 346f Bolton, Anthony 124 effi cient allocation 143 ‘bond-washing’ 28 fundraising 124, 242–4 Bonsor, Sir Nicholas 74 Carpenter, Michael 116 Booz Allen 111 ‘The Case for Liquidation’ (The Boswood QC, Anthony 60, 61, 65, 86, 349t Spectator) 140 Brace, Glenn 348t ‘cash calls’ 35, 56, 58, 68, 82, 137, 150, 155, Bradford, Bernard 151 176, 244 Bradley, Joe 114–15, 158, 183, 192, 208, 223, huge demands for 90, 91, 94 282, 319, 347t unpaid 194, 197 INDEX 369

Cassidy, Tony 157 Neil Shaw approaches 102, 104 catastrophic events 2, 32, 37, 39, 41–2, 121, governance 84–5 147, 162, 200 Outhwaite syndicate 87 earthquakes 169, 246–7 Tom Benyon and 126 hurricanes 38, 40, 99 tribute to 112 Cater Allen 86 Colorado State Securities Department 245, Catlin, Stephen 21, 243, 281, 302 247, 350t ‘cease and desist’ orders (US) 246 Commercial Court 140–1, 146, 152, 175 central fund 43–4, 64, 139, 141, 155, 160, Committee of Lloyd’s 15, 22, 25–6, 41–2, 225, 269, 293 56, 111, 170, 296, 297, 335 Clementson case 165 communications department 71, 251, 274, Equitas and 166, 202, 203 290, 323 incorporated members and 123 compensation see settlement offers levy 95, 96, 99, 195 Comprehensive Environmental Response, protective notifi cation 233 Compensation and Liability Act ‘special contribution’ from members 197 (CERCLA) see ‘Superfund’ withdrawals 56, 57, 100, 105–6 Congdon, Professor Tim 217 ‘central fund 2’ (CF2) 182, 190 Conservative Party 73, 74 Central Services Unit (CSU) 114, 158, 183, conspiracy theories 302, 320 208, 347t contingency planning 203 see also Members’ Services Unit (MSU) continuous professional education Centrewrite 72, 106, 131, 183, 231, 285 (CPE) 142 ‘Chain of Security’ 225, 288 Cooke, Lord Justice 298 Chairman’s Strategy Group (CSG) 302, Coopers & Lybrand 37 303, 322 Coppell, Andy 215 Chairmen of Lloyd’s 347t, 348t corporate capital 129, 130, 263, 291, 318, Charman, John 19, 21, 70, 116, 230, 232, 322 256, 347t Corporate Membership Unit 115–18 Chartered Insurance Institute (CII) 6–7 increasing role of 193, 197, 198 Chatset 17, 41, 88, 99, 126, 140, 194, 221 Corporate Capital Association 292 estimates of losses 71, 76, 78 corporate membership 115–18, 123, 124, Chief Executives (CEOs) 21, 25, 103–4, 108, 145, 235, 287, 291 226, 227, 294, 302, 323, 347t, 348t Corporation of Lloyd’s 18, 20, 142, 294, Christopherson, William 116 347t, 348t Citibank 276 Council of Lloyd’s 2, 7, 9, 17, 54, 70, 74, 188, Citigate 71 192, 224, 319, 337f Claims Directors (Equitas) 348t budget reforms 56 claims-handlers 10, 20, 88, 122, 304, 305, 306 central fund 64–5, 95, 99 Clarke, Giles 262 Committee of Lloyd’s and 25, 26 CLM (Corporate Lloyd’s Membership) 117 constitution 189 CLM Insurance Fund 166 ‘duty of care’ 91 Cockell, Michael 40–1, 46, 58, 268, 347t evolution of governance 24–7, 32, 50, 97 Cohen, Harry 73 Fisher Report 48 Cole, Richard 218 members of 24, 82–3, 124, 222, Coleridge, David 8, 61, 69, 74, 76, 81, 82, 91, 338t, 347t, 348t 100, 320, 347t Names’ and 62–3, 210, 263–4 cash calls 94 Neill reforms 41–2 central fund levy 96 Outhwaite syndicate 59 David Rowland and 101, 102 reform measures 44, 47–8, 54–5 Evening Standard article 85–6 review of unlimited liability 22, 36–7, 50, 51 370 INDEX

County NatWest 117 Settlement Agreement Review G Court of Appeal (UK) 146, 150, 155, 177, roup 271 254, 271, 282, 297, 298 ‘The Deficit Millionaires’ (Barnes) 127–9 ‘fi rst past the post’ upheld 175, 178 Delves Broughton, Lady Rona 70, 75, 92, Lloyd’s v Clementson 151–2 105, 112, 193, 224, 291, 323, 324, 347t ‘pay now, sue later’ 244 Demmerle, Peter 190, 219, 349t Court of Appeals (US) 80, 159, 274 Department of Corporations (DoC) Cox Insurance Holdings 235 (California) 245–6 Crall, Michael 158, 215–16, 229, 280, Department of Trade and Industry 304–6, 307, 308, 311, 318, 348t (DTI) 26, 72, 131, 171, 172, 195, 203, Cresswell, Mr Justice 140–1, 224, 295, 218, 223, 325 296–7, 300 Equitas 202, 254, 255, 259, 260, 261, 275, Cromer, Lord 11, 112, 326, 335 279 Cryer, Bob 73 prospect of Lloyd’s insolvency 231, 267 C.T. Bowring (broker) 9, 35 regulation of insurance industry 161–4, Cuthbert Heath 75 350t US Names 248 Daily Telegraph 108 Deputy Chairmen 105, 115, 116, 125, Dandridge, Christine 323 129–30, 130–1, 230, 347t Danna, Judge Alden 204 DGXV (directorate-general for internal Darling, Alistair 231 market) (EU) 300–1 Dashwood, Sir Francis 139 directors 339t Davy, Richard 348t Dixon, Peter 336 Dawson, Michael 235 Document Requirements (DRs) 310 Daykin, Chris 163, 259, 350t Doll-Steinberg, Alfred 76, 85, 88, 103, 135, De Laszlo, Damon 221, 262, 344, 348t 348t Deacon, David 301, 350t Donner, John 12, 53, 58, 59, 64, 71, 171–2 ‘Dead man’s stop’ 262 double counting of reserves 256–7, 258–9 Debt Allocation Matrix (DAM) 286 Drysdale, Andrew 47 debt credits 181,190, 192, 193, 202, 206, Duguid, Andrew 54, 79, 83–4, 85, 117, 127, 208, 209, 281–4 166, 321, 348t fairness versus pragmatism 235–6, contingency plans 164 237t, 239–40, 250 Peter Middleton’s resignation 226 fi nal proposals for allocation of 235–6, Reconstruction and Renewal (R&R) 290 237t, 238–40 Ron Sandler 182 debt recovery plans 57, 150–2, 154, 176, US investigations 300 181, 194, 252, 281–4, 287–8 Dumas, Raymond 256 Deeny, Michael 11, 96, 155, 181, 201, 221 Durant, David 93, 118, 205, 270 Association of Lloyd’s Members 106, 292, 303, 348t Earl Alexander of Tunis 62 elected to Council of Lloyd’s 229, 230, earthquake cover 169, 246–7 237 Eastgate 212 Equitas trustees 281 Economic Insurance Holdings Ltd 235 Gooda Walker Action Group The Economist 106, 154, 227, 336 (GWAG) 89, 135–6, 137, 138–9, 145, Eichen, Heinz Ulrich Von 61, 146 146, 147, 270, 317 elected external members/ hardest-hit Names 266 working members (Council of Litigating Names Committee (LNC) 154, Lloyd’s) 338t, 347t, 348t 240 Electoral Reform Society 99 Names’ Committee (NC) 205 Ellis, Jack 300 INDEX 371 environmental pollution 81, 113, 122, 125, Evening Standard 145 156–7, 162, 204, 219, 220, 328 Exchange Rate Mechanism (ERM) 100 increase in litigation 33–5, 43, 49 Extraordinary General Meetings ‘equine’ (‘bloodstock’) insurance 26–7 (EGMs) 2, 96, 99, 101, 105, 121, 123, Equitas 150, 165, 166, 172, 173, 180, 217, 124, 284, 292 314, 318, 325, 328 Exxon Valdez 40, 122, 202, 219, 307–8 asbestos claims 309, 310 authorisation process of 254–61, 271–2, Fagan, Patrick 175 275, 276, 280, 281 Fairness in Asbestos Resolution (FAIR) Bill authorisation received 279, 280, 281, 288 (US) 310 chairmen 214–15, 258, 348t Fallon, Ivan 74 Chief Executives (CEOs) 215, 311, 312, Farrar, Mark 65, 102, 205, 348t 348t Federal Bureau of Investigation (FBI) 80, Claims Directors 348t 81 compulsory reinsurance of Names 233 Feigin, Philip 247, 248, 350t development of 158, 181–2, 188, 197, Feltrim 41, 49, 75, 100, 175 212–17, 221 Feltrim Action Group 106, 137 Exxon Valdez 307–8 Fields Wicker, Jane 105, 348t ‘fi nality’ 196, 197, 198, 199, 200 ‘finality’ 206, 207, 221, 238, 239, 250, 264, 268 key legal advisers 349t Berkshire Hathaway (BH) and 311–12, Long Term Incentive Plan 312 313f, 314 management by Crall 304–9 Equitas 196, 197, 198, 199, 200 naming of new company 133 fi nal off er 271–2, 275–7 opening balance sheet 192, 193 personal statements 271, 282 Personal Stop Loss (PSL) 202–3 see also settlement off ers ‘Plan A’ 190 financial panel 119, 138, 139 pre-1993 liabilities 225 Financial Recovery Committee (FRC) 151, run-off as alternative 231 239–40 settlement off ers 204, 264, 299 Financial Recovery Department (FRD) 150 solvency margins 231, 313f Financial Services Act 71, 173 transfer of liabilities to 250 Financial Services Authority (FSA) 174, trustees 281 293, 294, 295, 301 see also Newco project Financial Services and Markets Act (2000) Equitas American Trust Fund 313 (EATF) 271–2, 275, 276 Financial Times (FT) 84, 98, 195, 198, 201, The Equitasian 314 250 Ernst & Whinney 176 Fisher Report 48, 335 Ernst & Young 224 Fisher Working Party (1980) 24, 25 errors and omissions (E&O) insurance 60, Fleming Williams, Andrew 234 65, 88, 106, 147, 148, 155, 168, 170, 244 Forman, Craig 55–6 court decisions 174–5, 175–6, 183 Forster, E.M. 315 fi nality bills 203 ‘forum selection clause’ 245 liquidation and 252 Franchise Board 302, 303 ‘Plan A’ 190, 192 Francis, Clive 125, 128 settlement off ers 136–7, 139 Fraser (test case) 282 Estate Protection Plan (EPP) 44, 285 fraud 52, 220, 272–3, 295–9, 321, 336 European Commission 300–1, 329, 350t Freeman, Michael 94, 297, 298 European Court of Justice 300 Freshfields (legal firm) 37, 53, 59, 187, 189, European Union (EU) 177, 178, 298, 300–2 224, 253, 295, 319, 342, 349t Evans, Alastair 301 Equitas 216–17, 233, 258 372 INDEX

Freud, Sigmund 241 Hain, Peter 98 Fried Frank (legal firm) 245, 246, 272–3, Hall, Stephen 143, 181, 339 319, 349t Hambros 204 ‘funds at Lloyd’s’ (FAL) 112, 236 Hamilton, Neil 98, 350t Furlonge, Nick 21 Hanbury, Nigel 12, 91–2 Hardcastle, Sir Alan 170, 171, 174, 231, 234, Gallwey, Dayrell 133 347t Garraway, Brian 105, 111, 231, 347t hardship cases 57, 97, 100, 105, 122–3, Gascoigne, Martin 92 127–9, 231, 284–5, 320 Gatehouse, Mr Justice 158 centralised administration 150, 151 General Counsel (US) 13, 27 hardest-hit Names 206, 207, 208, 238, General Undertaking 13 239–40, 250, 252, 265–6, 270, 284–5 George, Eddie (‘Steady Eddie’) 164, 248, helpline 92–3 277, 326, 350t High-Level Stop Loss (HLSL) Gilbertson, David 98–9 scheme 95–6, 131–2, 268 Gilkes, Robin 56 Members of Parliament 120 Gilmour, Ewen 116–17 Reconstruction and Renewal (R&R) 200, Gilmour, Rosalind 159, 188, 223, 229 205, 236 Gittings, David 229 temporary liquidity diffi culties 106, Gledhill, Gisela 259 112–13 Global Report 42, 46, 62–3, 267, 288 US Names 248–9 Goddard, Ken 159, 160 Hardship Committees 57, 90, 100, 120, 127, Goddard, Sarah 111 128, 138, 150 Gonzalez, Judge Irma (US) 176 Harford, Fernanda 127 Gooda, Anthony 127 Harford, Tim 130 Gooda Walker (managing agency) 41, 75, Harrison case 52 76, 105, 118, 120, 122 Harrison, Stanley 335 litigation and 134–6, 145–6,174, 175, 254, Hart, Michael 217 327 Hatter, Judge Terry 248 Gooda Walker Action Group (GWAG) 135, Havers, Sir Nigel 58 136, 137, 138, 139, 147, 148, 176, 270, Hay Davison, Ian 21, 25, 86, 105, 297, 298, 318 336, 347t Gordon, John 12, 56, 68 Haynes, Anthony 17, 68, 102, 348t governance 24, 25–7, 77, 83–4, 97, 217–18, Hazell, Dick 83, 86, 87, 95, 105 291–2 health claims 156–7 evolution of 335–6, 337f, 338t, 339t Heath, Cuthbert 3 Government Actuaries Department Heath, Sir Edward 296 (GAD) 214, 255, 350t ‘HELP: Helpful Encouragement for Lloyd’s Grabiner, Lord Anthony, QC 217, 349 People’ 93 Grange, Jacques 29 helpline 92–3, 118, 176, 236, 284–5, 323, ‘Granita’ 189 348t Green, Sir Peter 12, 29, 42, 45–6, 70, 347t The Herald of Free Enterprise (ship) 48 Greenberg, Hank 81, 311 Heseltine, Michael 72, 160, 161, 163, 171, Greene, Don 27, 184, 186, 191, 319, 349t 175, 218, 261, 350t Grenside, Sir John 61 Hewes, Bob 159, 162, 181, 184, 190, 192, The Guardian 61, 73, 114, 296 193, 289, 318–19, 348t A Guide to Corporate Membership Heywood, Desmond 281 123 Higgins, Dr 244 Gulf War (1991) 70 High-Level Stop Loss (HLSL) scheme 95–6, Gurney, Claud 88, 96, 99, 110, 121 131–2, 268 INDEX 373

High Premium Group (HPG) 141, 205, Internal Revenue Service (IRS) (US) 63, 72 206, 263, 291 introducers 12 Hill, Peter 71, 251, 323, 348t introductory commissions 55 Hirsch, J. 80 investment bankers 348t Hiscox Dedicated Insurance Fund 235 Isaacs, Anthony 189 Hiscox (managing agency) 235 Hiscox, Robert 8, 51, 68, 117, 181, 287, 292, J Walter Thompson (marketing 318, 319, 347t agency) 142 accessing value 144 Jackson, Robin 72 capital structure working party 166 Jaffray, Sir William 295, 296, 297, 298, 299, Centrewrite 72 329 David Rowland and 101–2, 115 Jago, Hugh 7 Deputy Chairman 129–30 Jain, Ajit 311, 312, 349t end of term of offi ce 229–30 James, David 103, 119, 166, 347t Lloyd’s Gold Medal 290 Janson Green Action Group 221, 231, 342 Newco project 157 Jardine, Paul 308 profi le 129–30, 231 Jenkins, Dale 80 Hitchens, Christopher 96 Jessell, Toby 14 Hoare Govett (investment research) 96 Jirinca, Eva 29 Hobbs, Richard 162, 163–4, 171, 195, 261, jobbers 48, 49 280, 307, 350t Johnson & Higgins 56 Hodgson, Godfrey 336 Johnston, Richard 115, 348t Hodgson, Sir Maurice 59 Joll, James 217 Hoffmann, Lord Justice 137 Jones, Tony 132, 229, 318, 348t Holden, Philip 150–1, 155, 176, 240, 243, JP Morgan 115, 319, 348t 244, 247, 282–3, 319, 348t judiciary 351t Hook, Colin 106, 348t HSBC 116, 117 Kay, John 325 Hughes, Judge Lynn 270 Keeling, Richard 41, 165, 212, 213, Hurst-Bannister, Barnabas 157 223, 231, 318, 347t Hutter, Heidi 114, 191, 229, 257, 318, 323, Deputy Chairman 130–1, 132, 133 324, 348t Lloyd’s Silver Medal 289 Newco project 131, 132–4, 157–8, 163, Reserve Group 254–5, 255–6, 257, 258 212 Kekst and Co (PR consultancy) 246, 348t departure of 195, 215, 216 Kellett, Bryan 7, 10, 77, 318, 347t Kent, Pen 291, 292 Income and Housing Support Scheme 285 Kerr, Sir Michael, QC 119 Independent on Sunday 194, 195 Keswick, Sir John Chippendale The Independent 61, 70, 114, 125, 145, 194 (‘Chips’) 204 Inland Revenue 51, 72–3, 250–1 Keys, Tony 114 The Insider (The SoN) 76 Kiln, Robert (managing agent) 6, 7–8, Insurance Companies Act (1982) 161, 172, 22–3, 36, 50–1, 234 175, 203 Kimball, Lord 52, 53 insurance cycle 4–5, 26, 33, 34, 36, 53, 54, King, Graeme 57, 141 60, 115 Kingsley, Robin 12, 16, 92 Insurance Division (Department of Trade ‘Kingston’ group 180–1, 183 and Industry) 161–4 Knight, Angela 233 integrated Lloyd’s vehicle (ILV) 235, 291, 294 Lamont, Norman 101 interest groups 141 Landgraf, Charles 219, 220, 284, 349t 374 INDEX

Lane, Peter 141–2, 187, 242, 246, 249, 319, Lloyd’s Acts (1982) 24, 25, 32, 45, 46, 243, 323, 347t 291, 303, 336 Lang, Ian 163 regulation of Lloyd’s 171, 172, 173 Lapper, Richard 113–14 Lloyd’s American Trust Fund (LATF) 81, Lasker, Judge (US) 94 95, 152, 160, 184, 246 Laurenzano, Vincent (Vinny) 159, 183–4, Lloyd’s Charities Trust 100, 121 185, 191, 260, 350t Lloyd’s Corporate Capital Association Lavery, Ken 81 (LCCA) 141 Law Courts (London) 177 Lloyd’s Gold Medal 50, 129, 289 Lawrence, Murray 28, 40, 45, 49, 50, 57, 58, Lloyd’s Insurance Brokers’ Committee 61, 62, 63–4, 298, 347t (LIBC) 9 Lazards 319, 348t ‘Lloyd’s League Tables’ 17, 41 LeBoeuf (law firm) (US) 27, 81, 187, 190, Lloyd’s List 102, 104, 114, 136, 242 191, 219, 245, 246, 284, 319, 349t Lloyd’s Log 48, 111 legal advisers 349t Lloyd’s of London: A Reputation at Risk Lentaigne, David 59 (Hodgson) 336 Leslie v Lloyd’s 159 Lloyd’s of London 3, 15, 20, 21, 47, 90, Levene, Lord 303, 347t 285–6 Libicki, Marcin 301 aggregate resources 150 Life in the Jungle (Heseltine) 161 business plan (1993) 113–14, 115, 116, Lime Street Action Group 91 119, 228 Lime Street (members’ agency) 12, 16, 23, chronology of key events 352–4 81, 92 collective responsibility for negligence ‘line-slip’ 44 and dishonesty 147 Lioncover 53, 64, 131, 190, 202, 231, 271 core values 142 liquidity 159–60, 171, 252 franchise structure 302 Litigating Names Committee (LNC) 148, global results (1980–97) 340t, 341t 154, 199, 240, 253, 262 growth in membership 40, 42, 43f, 54, litigation 63, 80, 95, 136–7, 183, 244–9, 253, 68, 78 265, 283 institutional resilience 320–3, 325 categories of 141 key characters, fi rms and institutions court judgments 174–7, 178, 287–8 347t, 348t, 349t, 350t, 351t ‘fi rst past the post’ principle 174–5, 178, leadership of 68–70, 101–3, 228, 232, 233, 238, 327 316–17, 347t fraud allegations 52–3 philosophy of non-intervention 42, 43, 44 global settlement 189 redevelopment of building 2, 3, 4, 19, 28, Gooda Walker (managing agency) 29, 30, 242, 315 145–6 rescue plan (1995) 191–8, 199, 200, 201–4 ‘indicative’ off ers 222–4, results aft er personal expenses (1997– 249–51 2013) 304 non-acceptors 282 Lloyd’s and the London Insurance Market: propensity to litigate 209t A Pivotal Year (Salomon Brothers) 140 see also settlement off ers Lloyd’s of London Press (LLP) 242 litigation panel 119, 139 Lloyd’s Market Association (LMA) 294 Littman QC, Mark 58, 64 Lloyd’s Market Board (LMB) 26, 83, 97, Lloyd George, David 179 103, 124, 214, 290, 291, 303, 337f, 338t Lloyd’s: A Route Forward 83 mission 111, 113, 115 Lloyd’s: The Alternative to Reconstruction Lloyd’s Market Certificate (LMC) and Renewal (LNAWP) 88, 342–4 112 Lloyd’s Act (1871) 18, 335 Lloyd’s Names Association (LNA) 286 INDEX 375

Lloyd’s Names Association Working Party Macdonald, James 145 (LNAWP) 88, 91, 120, 146, 147, 154, MacDonald, Roderick 249 172, 221, 262, 269, 285, 348t McKenzie Smith, Catherine 297 alternatives to Reconstruction and McKinsey 68, 75, 77, 83, 111, 113, 165, 180, Renewal (R&R) 343–4 318, 348t settlement off ers 138, 139 Magnus, Sir Laurie 116, 117, 124, 144 Lloyd’s Regulatory Board (LRB) 98, 105, Masojada, Bronek 348t 106, 111, 124, 170, 171, 229, 290, 291, Mail on Sunday 300, 301 303, 337f, 338t Maine Supreme Court 249 ‘Lloyd’s Run-off Board’ 221 Maitland, Angus 142, 268 Lloyd’s Silver Medal 289 Maitland Consultancy 348t Lloyd’s Underwriters Association Major, John 72, 261 (LUA) 125 Major, Nicola 111 Lloyd’s Underwriters Non-Marine managing agents 6, 7–8, 13, 18, 22, 36–7, Association (LUNMA) 7 72, 134–6, 203, 321 Lloyd’s Underwriting Agents Association auditors and 45 (LUAA) 56, 95, 105, 294 by capacity 331t Lloyd’s v Clementson 150, 151–2, 154, 175, growth and 42 177, 181 litigation 53, 242–3 Lloyd’s v Mason 150, 181 re-registration of 49 Lockheed 204 regulation of 294–5 London Insurance Market Investment top ten managing agents 331t Trust (LIMIT) 117, 124, 166, 319 top ten syndicates by capacity 330t London Insurance and Reinsurance Market see also underwriters Association (LIRMA) 167 management consultants 348t London Market Excess of Loss (LMX) 86, Mance, Jonathan, QC 136 91, 94, 97–8, 128, 134, 146, 171, 173, mandamus, order of 274, 275 321 Mann, David 72 fraud allegations 220 Mantle, Jonathan 85, 86, 90 ‘spiral’ 32, 37–8, 40, 41, 43 Maples, John 71 London Stock Exchange 164, 234 Marchant and Elliot (managing agent) 155 Long Term Incentive Plan (Equitas) 312 marine insurance 3, 18, 19, 20, 46, 75 ‘long-tail’ liability 32–5, 36, 49, 81, 174–5, Market Financial Services (MFS) 159 224, 309–11 Market Opinion Research International Longmore, Lord Justice 313 (MORI) 251, 268 Lord, Alan 25, 59, 64, 65, 71, 75, 80, 84, 85, marketing and public relations 141–2, 158, 347t 246, 251 departure 98–9, 103 markets 249, 325 Outhwaite syndicate 60, 61, 62, 63 capacity 5, 43f, 68, 291, 292f losses 4–5, 27–8, 35, 56–8, 100, 121, over-capacity 42, 43f, 53–4 169f, 170 structure of Lloyd’s market (1986) 5f Chatset analysis of 41, 168 ‘Marriage Made in Heaven, A’ (Atkins) 312 global results (1983 onwards) 47 Marsh & McLennan 9, 82 independent reviews 75 Marsh UK 9 Task Force (1991) report 78, 79 Masojada, Bronek 77 Lufkin, Dan 296 Matthews Wrightson (broker) 109 Lutine Bell 277, 279, 289 Maude, Francis 73 Lyons, Leighs and Wilkinson (test case) 282 Mays, John 205, 224–5, 253, 281, 348t Mediatrak 142 McClintick, David 296 Medniuk, Tony 7 376 INDEX

Members Agent Pooling Arrangement Moore Bick, Lord Justice 298 (MAPA) 115, 122, 168 Moore, John 17, 61, 70 members’ agents 27, 36, 38, 42, 113, 193, Moran, Christopher 25 196, 321 Morgan, Alan 348t attitude to losses 90 Morgan, Peter 348t introductory commissions 55 Morse, Sir Jeremy 119, 189, 347t ‘old boys’ network’ 116 Morse Report 85, 97–9, 337 Reconstruction and Renewal (R&R) 197, Moser, Scott 304–5, 306, 307, 309–10, 311, 198, 200, 203, 266 312, 318, 348t regulation of 294–5 motor insurance 20–1, 46 relations with Names 14, 15–16, 92, 118, Mottram, Buster 128 251 Mount Charles, Lord 250 responsibility for negligence 137, 138, ‘Mr Senior’ 26 146 Muhl, Ed 27, 185, 186–7, 201, 246, 275, 276, top ten members agents 331t 325–6, 350t tribalism 19, 21, 22 Municipal Mutual (MMI) 162 Warrilow case 53 Munn, Mrs Jessie 118 members’ services unit (MSU) 282, 290 Murray, Colin 6, 8, 64, 281 see also Central Services Unit (CSU) Murray Lawrence & Partners 157 Membership: The Issues (Lloyds) 14 Myners, Paul 214 Mencken, H.L. 251, 253 Mercer Consultants 105, 111, 348t Names 2–3, 6–7, 18, 53, 55, 74, 85, 173, 320, Mercury Asset Management 281, 306, 308 321 Merrett 418 Association 81, 158 admissions process 13, 14–15 Merrett Group 36, 43, 46, 205, 244, 298 attitudes of 118–21, 251–4 Merrett Names Association 176, 224 ‘Bill of Rights’ 263–4 Merrett, Stephen 8, 49, 52, 54, 65, 87, 286, brokers as 19–20 313, 347t centralised administration 114, 122, 208 Deputy Chairman 115, 130 coping with losses 56–7, 90, 91, 92–3, profi le 124–5, 231 176, 207 ‘Superfund’ 156 decision to sue 52–3, 137, 138, 155 Messer, Christopher 348t external Names 23 Middleton, Peter 103–4, 106, 108, 111, 118, ‘forum shopping’ 242, 309 127, 130, 138, 347t Gooda Walker trial 146 asbestos problem 172–3 indicative statements 201, 222–4, 240, breakdown of marriage 145 249–54 corporate membership 117–18 information received from Council of debt recovery 151, 181, 182 Lloyd’s 62–3 Equitas 223 key leaders 89 key leadership role 316–17 key legal advisers 349t profi le 109–10 legal action and 22, 121, 126 Reconstruction and Renewal (R&R) 192, letter from Philip Holden 151 193, 195, 196, 200, 205, 218, 228 members of Parliament 160 resignation of 225–7 minimum wealth and deposit review of costs 112, 114 requirements (1969–2002) 11, 17, Miller, Peter 2, 9, 25, 29, 42, 45, 46, 48, 49, 333f, 334 50, 70, 336, 347t non-acceptors 282–3, 295, 299, 329 Mills, Barbara 93 numbers (1953–1995) 10, 11f, 12 ‘misfeasance in public office’ 297–8, 298–9 Outhwaite syndicate 87 Mogg, John 300, 350t ‘passive amateurs’ 52 INDEX 377

Names – continued Nicholson, Graham 217, 319 Personal Stop Loss (PSL) insurance 44 Noel, Sally 120, 270, 298 problem of open years 37 nominated members of Council 336, public sympathy 128 338t, 347t, 348t representation of external and working non-litigating members 177, 206, 209t Names on Council 338t non-marine markets 18, 19, 20, 22–3, 35, ‘sense of honour’ 32, 52 37, 46, 83 suicides 2, 120, 158, 296 Norgle, Judge (US) 94 transfer of liabilities to Equitas 313 North American Securities Administrators see also US Names Association (NASAA) 247–8, 269 Names Action for Compensation and Northern Rock 194 Defence in Europe (NACDE) 286 Nottage, Raymond 42, 348t Names’ Committee (NC) 205, 206, 207, Novik, Jay 114 208, 209–10, 221, 223 Nunn, Senator Sam 80, 86 debt credits 235–6, 237, 238, 239–40 Nutting, Peter 55, 59–60, 61–2, 65, 86–7, Names Defence Association 170 88, 89, 264, 317, 348t Names Rights Group 264 Names Settlement Group 297 Oakeley Vaughan syndicate 80, 91 National Association of Insurance O’Brien, Barry 115, 116, 187, 196, 216, 289, Commissioners (NAIC) (US) 27, 143, 319, 349t 219, 246 Office of Fair Trading (OFT) 233 National Indemnity Company (NICO) 311, Oil Pollution Act (1990) 219 312, 313 Old Years Panel 105, 318 National Underwriter 201 One Lime Street (OLS) 111–12, 129, 168, Neill Committee (1986) 24, 42, 55, 71, 122, 169–70, 252, 269f, 271, 286 336, 337f ‘open years’ 36–7, 47, 63, 64, 78, 105, 106, ‘Neill Lets Lloyd’s Off the Hook’ (The 119, 131, 157 Economist) 336 Ordinary General Meeting (OGM) (15 Neill, Sir Patrick 75, 100 July 1996) 265, 270–1 Nelson, Anthony 261, 277, 279, 350t Outhwaite 1982 Names Association 65, Neville, Sir Roger 217 135 Neville Russell (audit firm) 45 Outhwaite Action Group 71 New York Insurance Department Outhwaite syndicate 41, 46, 49, 53, 64, 71, (NYID) 27, 95, 246, 260, 271–2, 275, 81, 83, 327 350t non-litigating members 177 Lloyd’s American Trust Fund run-off contracts 35, 37, 43, 45, 58–62, 63 (LATF) 153, 159–60, 183, 184–6, 187, trial 86–7 193–4, 195, 196, 198, 201 Outrageous Misconduct (Brodeur) 32 New Yorker 127, 196–7 overall premium limit (OPL) 17, 54, 75, Newbigging, David, 318, 348t 112, 116, 288 Equitas 214, 215, 216, 226, 258, 259, 276, overseas members 11, 14, 28, 90, 92 279, 280, 306–7 ‘overwriting’ 45 Exxon Valdez 308–9 Newco Business Strategy 157–8, 163 Parker Bowles, Camilla 296 Newco project 113, 114–15, 131, 132, 133, parliamentary scrutiny 70, 71–4, 170–4, 134, 156, 157–8 231, 233, 322, 326 see also Equitas Parliamentary Select Committee 183 Newsletter 63, 95–6, 105, 111 Pataki, George 185 Nichols, Alan 116 Patient, Matthew 59, 79 Nicholson, Brian 71, 349t Pawson, Nicholas 114, 214, 285 378 INDEX

‘pay now, sue later’ 55, 137, 155, 244, 287, Proskaur (US law firm) 81 327, 328 Pulbrook Syndicate (334) 81 Paying Names Action Group (PNAG) 272 Payne, Judge Robert E. 272, 273, 274, 275 Quackenbush, Chuck 246, 249,350t performance appraisal system 142 Queen’s Counsel 349t Perry, Roy 301 Personal Stop Loss (PSL) insurance 44, 45, Ramsay, Bill 208, 256 54, 78, 145, 193, 202, 236, 268 Rand Corporation 310 Petitions Committee (European Randall, Ken 212, 213 Parliament) 301, 329 Raphael, Adam 33, 88, 156 Pettitt, Dave 208, 290 rating agencies 82, 292–3, 300 Peyton, Michael 308–9 Rauch, Michael 273 Philipps, Charlie 117 Raymond, Lee 307 Phillips, Mr Justice 147, 174, 175 RBC systems 234 Ping An (insurance company) (China) 30 Reconstruction and Renewal (R&R) 212, Piper Alpha disaster 39 225, 227, 229, 231, 263, 267–8, 278, 318 Pitt, Harvey 245, 247–8, 272, 273, 274, 275, Council of Lloyd’s members involved 222 283, 319, 349t David Rowland introduces plan 199, 200 Pitt, William 133, 196, 290 development of 189, 191, 192, 195–8 ‘Plan A’ 189–94 reactions to 201–4 Planning for Profit 113 US Names 249, 272–3 Pollard, Alan 215 Reconstruction and Renewal: Allocating the Pollock, Gordon, QC 155 Settlement 236, 238 Pomeroy, Brian 189, 242 Redevelopment Committee 29 Porter, Alan 88, 154, 205, 221, 253, 262, Redwood, John 71 271, 344, 348t regulation 20, 64, 159, 254, 279, 287, 293–5, Posgate, Ian (‘Goldfinger’) 17, 25, 59 335, 350t Post Magazine 108 Department of Trade and Industry Postal Service (US) 300 (DTI) 163 potentially responsible parties (PRPs) 34 fi nancial services review 170–4 Potter, Graham 91 Fisher Report 48 Powell, Kenneth 29 key institutions 350t Powell, Val 96, 148 Morse/Walker Reports 97–8 Poynter, Kieran 75, 135 United States 26 PR Consultants (actuaries) 348t reinsurance 4–5, 6, 10, 23, 27, 33, 35, 64, 65, ‘pre-answer bonds’ 187 78, 299 premium income limit (PIL) 206 London Market Excess of Loss Premium Trust Fund 87, 153–4, 175, 183, (LMX) 37–8, 40, 41 253–4, 265, 288, 295 Newco/Equitas project 131, 132, 202, premiums (insurance) 5, 17, 28, 42, 43f 305, 313 press scrutiny 16, 27, 70, 71, 83, 98, 113–14, Reinsurance Association of America 158, 320 (RAA) 187 ‘fi nality’ package 251 ‘reinsurance to close’ (RITC) 34, 132, 217 Reconstruction and Renewal Rennison, David 118 (R&R) 194–5, 198 Reserve Group 212, 223, 229, 254–5, 258, Prettejohn, Nick 182, 294, 302, 347t 318 Price Waterhouse 75, 135 Resolution Trust Corporation 195 Principles for the Future Development of ‘retrocessionaire’ 37–8, 121 Lloyd’s 286–7 Reuters 83, 84 ‘proportionate cover’ 260, 281 Rew, John 17, 88, 126 INDEX 379

Richards Butler (solicitors) 59, 60, 349t visit to New York 186–7 Richardson, Gordon 164, 336 Roxburgh, Charles 77, 113, 274, 318, 348t Rickard, Jo 165, 245, 246, 319, 323, 324, development of ‘Plan A’ 165, 180, 182, 347t 183, 189, 192, 193, 195, 196 RICO 300 Royal Albert Hall meeting (May 1993) Ridley, Sir Adam 11, 115, 210, 240, 266, 119–21 310, 311, 317, 348t ‘run-off’ policies 43, 45, 46, 53, 58, 72, 131, Chairman of Equitas Trustees 280, 281 203, 212, 342 hardship cases 204–5, 207–8, 284, 285 Equitas 304, 305, 310 Riley, Ronald 80 Outhwaite syndicate 35–7 Riley, Sax 302, 322, 347t Ryan, John 348t risk-based capital (RBC) 143 Robinson, Valerie 83, 92–3, 323, 324 Salomon Brothers 140, 225–6 Robson, John 205 Samuel Montagu 319 Roby v Lloyd’s 94 Sandler, Ron 192, 196, 202, 221, 244, 251–2, Rocher, Philip 146, 240, 349t 263, 272, 317, 342, 347t Rogers, Richard 3, 28, 29 departure 294 Rokeby-Johnson, Ralph 8, 21, 46, 63, 69, Deputy Chairman 226, 227, 228, 229 296 Director, Special Projects 182–3 Rome, Chris 64 fraud allegations 247 Rose Thompson Young (managing Lloyd’s Silver Medal 289 agent) 75, 310 Sands, 348t Rosenblatt, Richard 220 Sasse case 52, 59 ‘Rota’ interview 14–15 Saville, Mr Justice 87, 94, 136, 137, 150, 153 Rothschilds 319, 348t Schacht, Jim 219–20 Rowland, David 9, 44, 68, 77, 83, 84–5, 99, Scheme of Arrangement 162 165, 252, 274, 347t Schreiber, Dale 81 allegations of perjury 298 Schwab, Charles 296 appointment as Chairman 101–2, 103–4, Schwarzer, District Judge William 159 105, 111, 119, 230, 243 Scott, Sir Richard 253 belief in Lloyd’s recovery 78, 145 Securities Act (1933) (US) 13, 80 considers resigning 266 Securities and Exchange Commission core group debate 188–9 (SEC) 80, 245, 246, 270 debt collection 150 Sedgemoor, Brian 72, 170, 171 departure 294 Sedgwick (broker) 9, 12 Equitas 214, 264–5 self-regulation 55, 65, 122, 170, 173, 174, indicative statements 223 201, 293, 321, 322 key leadership role 316, 317 Sellek, Dr Roger 213, 256, 318 knighthood 279, 289, 290 Serious Fraud Office (SFO) 71 Lloyd’s Gold Medal 288, 289, 290 Settlement Agreement Advisory new year message (1994) 140 Group 240 Peter Middleton’s resignation 226–7 Settlement Agreement Review Group 271 press scrutiny 251 Settlement Information Document profi le 108–9, 110, 170, 216, 231, 287 (SID) 269 Reconstruction and Renewal (R&R) 192, Settlement Offer Document (SOD) 271 193, 194–5, 196, 199, 200, 218, 224, settlement offers 30, 145, 148, 158–9, 165, 228, 274 175, 299, 323, 328 relationship with Robert Hiscox 129–30 business plan 113 Settlement Information Document Gooda Walker 138–9 (SID) 269, 271 indicative statements 201, 222–4, 240 380 INDEX

‘inventory settlements’ 309 Stace Barr (agent) 19 Names’ Committee (NC) 204–8, Stace, John 12, 41, 117, 165, 222, 229, 232, 209t, 210, 212 251, 253, 319, 347t Peter Middleton 181–2, 188 Standard & Poor’s 82, 292–3, 300 sale of building 242 statute of limitations 88, 177 Settlement Information Document Steingart, Bonnie 273 (SOD) 267–8, 269f, 270–2, 275–7 Stevenson, Hugh 308, 312, 318, 348t Shapiro, Stacey 85 Stewart Wrightson 9 Sharma, Paul 162, 260 Steyn, Lord Justice 151 Shaw, Neil 89, 102–3, 104, 114, 119, 122, Stiglitz, Joseph 310 348t Stockwell, Christopher 62, 88, 89, 105, 119, Shearman and Sterling 191 126, 147, 154, 171, 201, 206, 348t Sheldon, Mark 123, 124, 291, 337 alternative to Equitas 221, 225, 262, 310, Shipley, David 132, 213–14, 256, 257–8, 313 312, 318, 348t continuing opposition 285–6, 343 Simmons & Simmons (legal adviser) 349t ‘fi nality’ package 250, 253 Sinclair, James 86–7 Jaff ray trial 296 Skey, Charles 10, 72 US Names 248 Skinner, Dennis 72 Stockwell, Philadelphia 62 Slaughter and May 221, 262, 263, 344, 349t ‘strengthening reserves’ 35 Smith, Mr Justice Andrew 297, 298 Struggle Against Financial Exploitation ‘Smoke and Mirrors’ (World Insurance (SAFE) 298 Report) 195 Sturge, Arthur 335 Society of Lloyd’s v Robinson 295 Sturge, Charles 17, 168, 195 Society of Names (SoN) 76, 126, 227, 268 Sturge (managing agency) 8, 16, 59, 101, solvency 26, 30, 36, 56–7, 96, 172, 188, 203, 132, 145, 194 260 Sumption QC, Jonathan 77, 261, 349t continuing 224–5, 267 Sunday Times 74, 86, 114, 201 E&O assets 152–6 ‘Superfund’ 34, 81, 156, 157, 218, 219, 328 eff ect of letter from Philip Holden 151 Supreme Court (US) 33, 159, 309 Equitas 279, 313f syndicates 3, 4, 5f, 6–7, 8, 20, 34, 95, 96 Solvency and Security Committee 56–7, administration 133–4 64, 95 independent loss review 75 The SoN (The Insider) 76, 126 outstanding liabilities 255–6, 258–9 Soros, George 117–18 performance data 41 South, Tony 296 premium-income limits 45 Southwell QC, Richard 77 procedures 23 ‘Special Reserve Funds’ 28 reserves 27–8, 35, 49, 59, 91, 112, 131, Specialist Claims Unit (SCU) 156 132, 134 The Spectator 140 ‘run-off ’ policies 35–7, 43, 45, 46, 53 Spencer, Dr Jonathan 161, 164, 202, 231, selection of 15–16 307, 325 350t spiral losses 41 authorisation of Equitas 259, 260, 280 top ten by capacity 330t questioned by Treasury and Civil Service value 143–5 Committee (House of Commons) 171, year of account 15 172 Spooner, Richard 11, 96, 134, 205, 208, Task Force (1991) 77–8, 83–4, 85, 95, 97, 239–40, 266, 278, 281, 318, 348t 108, 111, 113, 115, Spreckley, Colin 121 taxation 27–8, 51, 53, 63, 70, 72–3, 74, 170, Springett, Pauline 114 250, 326–7 INDEX 381

Taylor, Ian 73 asbestos 32–3, 152–3 Taylor, Max 292, 294, 300, 347t banking reforms (‘Big Bang’) 48–9 Taylor, Tony 256 Court of Appeals 80 Teff, Jim 10, 156, 215, 348t environmental pollution 33–4, 122 Temporary Restraining Order (TRO) ‘forum selection clause’ 245 (US) 247, 272 General Counsel 13, 27 terrorism 162, 300, 302 growing liabilities 46 Texas Federal Court 159 infl uence of laws and customs 13 Thatcher, Margaret 72 markets 8–9 Thomas-Everard, Christopher 41, 85 regulation 26 Thompson, John 129 Supreme Court 33, 40, 159, 219, 274, 308, Tilling, John 21 309 Tillinghast Towers Perrin (actuaries) 4, US Names, 94, 245–9, 260–1, 269, 272–5, 203, 214, 234, 256, 257, 258, 348t 300 Time magazine 295, 296 fraud investigation 300 The Times 69, 76, 104, 105, 114, 121, 137, indicative statements 245–6 297 litigation 80–2, 176–7, 178, 253, 270, Today programme (BBC Radio 4) 94, 155, 272–3, 274, 283–4, 295, 328–9 274 lobbying 218–20 Tolle, Rolf 303 New York Insurance Department Tomlinson, John 61 (NYID) 183–7 Torres, Debra 273 ‘state credits’ 284 ‘tort law reform’ 218 ‘Superfund’ 156–9 Towards the Settlement 264 see also Names traders 3, 4, 5f, 32, 121–3 trading fl oor (‘the Room’) 2, 4, 6, 8, 9, 19 Vale, Edward 290 Treasury and Civil Service Committee, Validation Steering Group (VSG) 221, 231, House of Commons 170–4, 201, 223 262, 268, 317, 344–5 Treaty of the European Union 177 Valin Pollen (PR company) 71 tribalism 18–21, 22, 23, 54 Value at Lloyd’s (Value Group) 143–5, 167, Truth About Markets, The (Kay) 325 168 Ventiroso, Chris 10, 156 Ultimate Risk (Raphael) 33, 88, 156 Verey, David 348t underwriters 2, 3, 4, 5, 6, 21, 22, 28, 45, 181 Victory Insurance Company 171 independence 23 View of the Room, A (Davison) 25 litigation 86–7 ‘Viewpoint’ (Newsletter/One Lime redevelopment of building 30 Street) 105 reinsurance 34–5, 40 Viggers, Sir Peter 83 relationship with brokers/agents 9–10, Vos, Geoffrey, QC 146, 349t 19, 20, 54 total capacity 165–6 Wade, Michael 44–5, 51, 65, 68, 72, 78–9, training 6–7, 142 101, 117, 318, 347t tribalism 18–21 Wakefield, Hady 35 US liabilities 35–6 Walbrook Insurance Company 162 see also brokers; managing agencies Walker, Sir David 59, 79, 86, 101, 347t United Names Organisation 297 Walker, Derek 146 unlimited liability 13, 15, 22, 36, 76, 91, 117, Walker Report 97–9 167, 213, 291 Wall Street Journal 55–6 review of 50–1, 78, 303, 318 Wallace, Diana 14 US 152–3, 204 Waller, Lord Justice 297 382 INDEX

Walsham Brothers 38 Williams, Michael 55 Ward, Richard 347t Willis Corroon (broker) 9, 82, 87 Warrilow syndicate 49, 52, 53, 71, 76, 126, Willis Faber (broker) 9 317 Wilson, Gillian 93, 127, 176, 284, 323, 324, Webb, Peter Cameron (PCW) 52, 53, 59, 348t 64, 70, 190, 336 Wilson, Lord Justice 298 Webster, John 215 Wilton, Sarah 208 Wellington Names Association 158 women: contribution of 7, 11, 70, 323, 324 West, Angus 56 ‘won’t pays’ 181, 207, 230, 237, 239, West, David 296 244, 252 Wheatcroft, Patience 108 Workers’ Compensation Act (US) 33 Wiberforce, Lord 58 World at One (BBC Radio show) 194 Wilcox case 52 World Insurance Report 120 Wilde Sapte (solicitors) 135, 136, 146, 147, Writs Response Group (WRG) 177 240, 349t Wroughton, Philip 9, 82–3 Willard, Anthony 146 Williams, Carolyn 319 Youell, Richard 133