$208 MILLION MAY SETTLE NAMES SUIT AGAINST LLOYD'S

$208 MILLION MAY SETTLE NAMES SUIT AGAINST LLOYD'S

The biggest lawsuit in the 300-year history of Lloyd's of London has resulted in a $208 million (UK116 million) out-of-court offer to 987 private individuals whose personal wealth backs insurance underwriting at Lloyd's.

The individuals, known as Names, were members of the ill-fated Lloyd's syndicate 317/661. In 1982 the syndicate's professional underwriter, Richard Outhwaite, underwrote large volumes of asbestosis liability reinsurance on behalf of other syndicates at Lloyd's.This business turned sour later in the decade when high compensation awards for asbestosis victims began to emerge from U.S. courts. The Names on syndicate 317/661 have already paid over $360 million (UK200 million) in claims and the final check is expected to be even higher.

The losses on syndicate 317/661 created a fever of litigation at Lloyd's that came to be known as Outhwaititis. The hardest hit Names banded together to sue Richard Outhwaite's company, RHM Outhwaite Underwriting. They also sued the 80 agents at Lloyd's who had placed them on the Outhwaite syndicate.

The wealth put up by Lloyd's Names is spread around the market by members agents. Their job is to place Names with the best syndicates available, adjusting the Names' underwriting exposure to the degree of risk they are prepared to accept.

The Outhwaite Names held their members' agents responsible for failing in their duty to scrutinize the professionalism of underwriting at RHM Outhwaite. In 1982 syndicate 317 was the sixth biggest marine syndicate in the Lloyd's marine market, so the alleged negligence was widely spread.

The Outhwaite Names' case opened in the High Court in London on Oct. 7 last year. Last Monday the judge, Justice Saville, adjourned the proceedings to enable the two sides to discuss a settlement.

The settlement that has now been proposed will be discussed at a meeting of the Outhwaite Names 1982 Association on March 4. However, acceptance should be a formality: The offer has been approved by the Names' lawyers and is unlikely to be rejected.

Simon Morgan, a spokesman for the Outhwaite 1982 Names Association, said that the deal represented a "thoroughly satisfactory outcome" for the Names.

The Names who are suing have so far incurred claims equivalent to 495 percent of the premium income they underwrote through RHM Outhwaite Underwriting in 1982. The settlement proposed would reimburse them by up to 450 percent-460 percent, Mr. Morgan said.

In other words the litigant Names should be able to recover nine-tenths of the money they have so far paid out. However the remainder of the 1,614 Outhwaite Names who refused to sue will have to go on paying claims.