LLOYD'S VOTE SET TODAY ON CORPORATE MEMBERS

LLOYD'S VOTE SET TODAY ON CORPORATE MEMBERS

The future of Lloyd's of London may be settled later today when members decide whether to allow companies to join the troubled insurance market.

An extraordinary general meeting will be held in the famous Lloyd's building this afternoon to vote on corporate membership.Around 31,600 members are entitled to vote in today's ballot, although only a fraction of those are expected to attend the meeting. Others have already voted by proxy.

A last-minute attempt by dissident members of Lloyd's to adjourn the meeting until their own disputes with the market were settled appeared to have failed. As a result, Lloyd's investors are due to vote on seven resolutions by early evening.

Under Lloyd's unique structure, individual traders, known as Names, pledge their private wealth to the market and have unlimited liability for any underwriting done on their behalf by Lloyd's syndicates. The entrance of corporate members with limits on their risk exposure beginning Jan. 1 will end 300 years of tradition.

Until recently, Lloyd's has been a lucrative investment for Names, with Lloyd's members earning a profit from underwriting activities without losing their capital. At the same time, the unlimited liability policy gave Lloyd's an unrivalled reputation for security. Lloyd's boasts that it has never failed to pay a valid claim.

But as huge claims began to swamp the market a few years ago, and accusations of malpractice started to surface, names began to resign from the market or cease underwriting. Many are unable to withdraw fully because of unsettled claims dating back several years. Losses in recent years culminated in a massive UK2.9 billion (US$4.4 billion) deficit in 1990, Lloyd's latest

financial year under its three-year accounting system.

However, active underwriting membership has shrunk to just over 19,500, reducing the underwriting capacity of the Lloyd's market from a peak of almost UK11.4 billion (US$17 billion) in 1991 to some UK8.8 billion (US$13 billion) this year.

About a dozen companies have expressed firm interest in joining the market since Lloyd's chairman David Rowland unveiled proposals for corporate membership earlier this year, while many others have expressed interest.

Early indications suggest that Lloyd's capital base could be strengthened by about UK1 billion next year if corporate membership is approved. However, more individual members are expected to resign, so the net addition to Lloyd's capital base may be smaller.