Lloyd's of London unveiled Tuesday a UK900 million (US$1.4 billion) settlement offer in an attempt to deter lawsuits by 17,000 investors who lost billions of pounds through alleged mismanagement by Lloyd's underwriting syndicates.

But the leader of the largest group of litigants said the offer was unlikely to be accepted.Lloyd's chief executive Peter Middleton said in a letter to the loss-making Lloyd's investors, or Names, that the settlement proposal was "the best and the most fair offer that Lloyd's can make." But Michael Deeny, chairman of the biggest group of litigant Names, said he believed the offer was "unlikely to be acceptable, not merely to our Names, but to the majority of Names."

Mr. Deeny heads an action group of about 1,500 Names who backed Lloyd's syndicates managed by the Gooda Walker underwriting agency, now in liquidation. The Gooda Walker Action Group is suing various parties at Lloyd's for UK515 million.

Lloyd's has sent details of its settlement offer to 21,000 Names. The vast majority of these individuals - about 17,000 - are suing or planning to sue their Lloyd's underwriting agents, which are the companies that either managed syndicates or advised Names which syndicates to join.

Names have until January 31 to decide whether to accept the settlement offer.

A complicated system of weightings determines how much money each individual Name will be offered:

* The Names participating in action groups will be offered 50 percent more than those who have not considered litigation.

* Names who had issued writs before October 31 will receive 20 percent more than those who were slower off the mark.

* Names who backed more than one high-risk catastrophe reinsurance syndicate will receive an extra 10 percent for every additional syndicate they supported. These Names are considered to have the strongest claims for negligence.

Mr. Middleton said that no individual Name would receive more than 60 percent of his or her losses under these formulae. More than 100 Names will be offered between UK500,000 and UK750,000 each. Fewer than 40 Names will be offered between UK750,000 and UK1 million each.

Mr. Middleton and Lloyd's chairman David Rowland expressed the hope that the speed and certainty of the settlement offer would deter Names from taking further legal action. The offer falls far short of what Names might have received from the courts: one of the two Lloyd's panels set up to devise settlement terms has calculated that the courts might have offered Names UK1.6 billion.

But even if the courts were to award the litigant Names UK1.6 billion, the money available to pay such awards might fall far short of the sums sought. The biggest contributor would be the errors and omissions underwriters that insured the Lloyd's underwriting agents against lawsuits for negligence.

A Lloyd's panel has estimated the E&O cover available to pay claims against agents at between UK820 million and UK1.085 billion. This leaves a shortfall of at least UK515 million on the sums that might be awarded by the courts. A further UK50 million contribution from the underwriting agents themselves might also be available, but would still not bridge the gap.

Mr. Deeny said the current settlement offer, which includes a contribution of around UK400 million from e&o underwriters, represented a "wonderful deal for the e&o insurers." He said he was confident that more money could have been wrung out of the e&o insurers, which are all Lloyd's syndicates themselves, if litigation had been imminent.

The decision Names now have to make is whether the UK900 million offer is more than they could reasonably hope to achieve from litigation. Lloyd's has offered a carrot in the form of a UK450 million contribution from the market's central guarantee fund, to which all Names contribute.

The central fund, currently worth UK1.001 billion, is supposed to stand as a reserve of last resort for Lloyd's policyholders. In recent years it has been used more often to bail out loss-making Names.

In a letter to Names, Mr. Rowland said that no central fund contribution would be forthcoming if Names reject the settlement offer. They will have to take their chances with the courts and hope that e&o underwriter and others will have enough money to make it worth their while.

Other potential sources of funds are the brokers who placed business with the loss making syndicates and auditors who gave them a clean bill of health. No money from these sources is currently on the table, but Lloyd's plans to seek voluntary contributions of at least UK50 million. The money would go towards reducing the burden of the UK900 million settlement on the current contributors.