LLOYD'S TO OFFER NAMES $1.4 BILLION TO SETTLE

LLOYD'S TO OFFER NAMES $1.4 BILLION TO SETTLE

Lloyd's of London is expected to unveil todaya UK900 million ($1.4 billion) settlement proposal it hopes will cure the cancer of litigation that has been devouring the 305-year-old insurance market.

The offer will be made to about 21,000 Lloyd's investors, or Names, who backed heavily loss-making underwriting syndicates at Lloyd's in the late 1980s. The vast majority of these Names - around 17,000 - are taking legal action against Lloyd's agents who either managed these syndicates or who advised the Names to join them.The litigant Names' total losses are UK3.5 billion. The settlement offer falls well short of what they'd been hoping for. The biggest group of litigant Names, the Gooda Walker Action Group, represents 1,500 investors, and is suing various parties at Lloyd's for UK515 million. Beyond that 15,500 Names are also taking action against Lloyds agents for 1980s losses.

The aim of the settlement offer, which has been over six months in the planning, is to clear the decks at Lloyd's of time-consuming and costly litigation that officials fear is damaging the image of the market. Lloyd's has recently been seeking new capital from corporate investors to make up for the departure of individual Names burdened by heavy losses.

Not all the Names who will be offered compensation are suing. Market sources indicated that Lloyd's intends to offer compensation to both litigant and non- litigant Names - although with a weighting in favor of the litigant Names.

Money to pay for the settlement will be raised from two principal sources. The first is the errors and omissions underwriters who insured Lloyd's underwriting agencies against negligence suits. These are Lloyd's syndicates in their own right, so the losses will simply be shunted from one part of the market to another.

The second main source of funds is the central fund at Lloyd's, to which all Names contribute. This fund currently stands at around UK1 billion.