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Wednesday, 17 October, 2001, 17:11 GMT 18:11 UK

Lloyd's names in cash call


Lloyd's of London
Lloyd's: The world's oldest insurance market
Insurance market Lloyd's of London has confirmed it is to make a £780m cash call to help it cope with losses from the terror attacks on the US.

Lloyd's has estimated that the attacks will cost it £1.3bn, although this figure is likely to be revised.

The 'names' - the individual Lloyd's members who pledge their wealth to back insurance risks - have been asked to stump up £246m, equivalent to about one third of the total cash call.

The balance of the funds will come from Lloyd's corporate members, major insurance firms including QBE Insurance Group, Hiscox and Wellington Underwriting.

The cost of the attacks to the insurance industry as a whole has been estimated at £48bn.

Future profits

The Lloyd's names will have to find an average of about £44,000 each, although in reality there will be huge variations in payments, depending on exposure.

It is not unusual for Lloyd's to make a cash call on its 2,800 individual members, although the amounts involved this time are higher than normal.

However, the financial impact of 11 September on names is unlikely to be as severe as with previous disasters, which saw some names bankrupted.

Many will simply transfer the cash from existing accounts, and few are expected to have to raise extra capital.

Those who stay in the market are likely to see increased profits in future years, as insurance premiums escalate.

Weathering the storm

The 300-year-old Lloyd's insurance market is backed by $27bn of assets.

It is expected to weather the storm created by the attacks on the World Trade Centre.

But it may need to dip into its reserves of about £1bn held in its central fund.

The Association of Lloyd's Names held a meeting on Tuesday to discuss the implications of the cash call.


Related to this story:
Lloyd's names count the cost of terror (26 Sep 01 | Business Basics) Attacks to cost Lloyd's £1.3bn (26 Sep 01 | Business) Insurers face record claims (12 Sep 01 | Business) Lloyd's asks members for more cash (30 Aug 01 | Business) Lloyd's of London - a risky business (26 Sep 01 | Business Basics)


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