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EDITIONS
Wednesday, 26 September, 2001, 12:23 GMT 13:23 UK
Lloyd's of London - a risky business
The distinctive Lloyd's building designed by Richard Rogers
The distinctive Lloyd's building designed by Richard Rogers
Lloyd's of London is not a company but a market of more than 120 competing individuals and companies.

It is the leading insurance market in the world.

Key facts
Lloyd's underwrites businesses in 100 countries
68% of FTSE 100 companies and 83% of Dow Jones components have policies at Lloyd's
Lloyd's share of the world aviation market is 24.7%
The big five airlines have policies at Lloyd's
About 5% of the world's re-insurance is placed at Lloyd's
The origins of this historic British institution stretch back three centuries to a modest coffee house owned by Edward Lloyd of London.

It was on his premises that some of the first insurance arrangements for marine merchants and sea captains were organised.

Over the centuries Lloyd's gradually evolved from a club of marine underwriters to an innovative market underwriting a huge variety of international risks.

Today it not only provides cover for ships but for cars, planes, satellites, intellectual property and much more.

The current generation of brokers, underwriters and agents are housed in an avant-garde building designed by the architect Richard Rogers in Lime Street in London.

Battle for survival

The market at Lloyd's is based on the principle of spreading risk.

Each risk is underwritten by a number of syndicates backed financially by individual and/or corporate members.

Underwriters accept the risks from brokers - on behalf of the members of each syndicate.

If calculations are precise, the cost of meeting insurance claims and providing a return for the capital backers can be settled from the flow of premiums.

The history of Lloyd's stretches back three centuries
The history of Lloyd's stretches back three centuries
From time to time however major losses are experienced at Lloyd's and the scale of those experienced between 1989 and 1993 had a dire impact.

Compensation payments for asbestosis, hurricane damage claims and the cost of cleaning up after the Exxon Valdez oil tanker disaster were some of the most famous unexpected catastrophes to hit Lloyd's.

The bill came to 7.9bn and threatened to destroy that 300-year-old institution amid fears that the capital backers would be wiped out.

However corporate capital backers and a reconstruction and renewal plan ensured survival.

Lloyds now has 894 corporate members, up from 435 in 1998, who contribute $9,099bn.

It also has 2,852 individual members, down from 6,825 in 1998, providing $1,965bn.

The level of private wealth which an individual applicant must be able to prove in order to become a member of an underwriting syndicate is currently 350,000.

The market makes a major contribution to the UK economy each year - adding more than 18 million to the UK balance of payments between 1985 and 1995.

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