RESCUE PLAN FOR WEAVERS IS A PUZZLE IN LONDON

RESCUE PLAN FOR WEAVERS IS A PUZZLE IN LONDON

U.K. brokers and underwriters questioned Wednesday whether John Head's much- publicized "rescue" plan for London's H.S. Weavers (Underwriting) Agencies Ltd. will be backed by cash.

Mr. Head is the owner of the Anglo American Insurance Co., which until last Monday was responsible for 45 percent of Weavers' business. Mr. Head's endeavors to salvage the Weavers' agency in spite of the financial problems of Walbrook, the other 55 percent of the agency's "slip," have been characterized as a takeover, in some London newspapers.But one broker told The Journal of Commerce Wednesday that this "rescue attempt" by Mr. Head is apt to leave the insurance broking community cold if he only "picks up (Anglo's) profitable business" and "lets Walbrook go to the wall." What is sorely needed, he said, is "capital."

Well-known Lloyd's underwriter Stephen R. Merrett added that he hadn't heard Mr. Head "is about to use his cash to bail anybody out."

Mr. Merrett, chairman of Merrett Holdings PLC, has competed with Weavers on certain U.S. liability classes typically insured by Merrett syndicates and H.S. Weavers's non-Lloyd's companies.

"As I understand it, Mr. Head has made a proposal that a team of (Weavers') underwriting management should move across and provide a similar role" within a newly-formed subsidiary of Anglo American. But "who is proposed to do the underwriting at this stage of the game is a mystery to me," said Mr. Merrett, who acknowledged that Mr. Head would likely be reluctant to include senior underwriters responsible for Walbrook's current dilemma.

Britain's Department of Trade and Industry sent shock waves through the London insurance community Monday when it barred Walbrook from continuing to write business pending a Tillinghast report on the adequacy of company reserves.

Weavers has acted as an underwriting agent for a pool of insurers for over 20 years, said Mr. Merrett, but Walbrook in particular has grown over the years, and as of Monday represented the bulk of Weavers' underwriting ''slip," which provided U.S. casualty capacity within a vital working layer below $20 million.

One London observer questioned whether other insurers will be eager to fill the gap that may be left, should Walbrook be forced to quit writing permanently.

There is some speculation that insureds who neglected to heed warnings which mega-insurance brokers Alexander & Alexander and Marsh & McLennan issued to their clients over the past two years regarding Weavers' long-term viability may have been seeking coverage at substandard rates.

Murray Lawrence, chairman of Lloyd's, agreed that insureds could suddenly be forced to look elsewhere to obtain coverage which has been provided by "a major player" in the London market.

However, Mr. Lawrence said he was certain that "a lot of good business" has been written through Weavers, perhaps on out-dated (occurrence-based) policies, which Lloyd's or U.S. insurers like the American International Group could pick up. That is, if the Tillinghast report warrants Walbrook's demise.

As Anglo was purchased late last year by New York merchant bank John Head & Partners LP, currently Weavers' management is looking to Mr. Head to help preserve it as a market should Walbrook be shut down entirely in the immediate future.

But the details of that plan remain sketchy, a spokesman for Anglo American confirmed.

Anglo spokesman James Bradley said Wednesday that it represents only "a management agreement at the moment," whereby Anglo will "consult with Weavers," regarding its future insurance placements. Mr. Bradley also said the Tillinghast report, originally expected today, may not be released for the next two weeks.