Cost of buyout saves Names

MOVES by Lloyd's to force out its individual investors, or Names, seem to have been scuppered by senior players in the insurance market who regard the buyout price as too high.

A central plank of the reform package unveiled by chairman Sax Riley was to rid the market of the remaining 2,800 individuals who back underwriting at Lloyd's. The authorities, who saw Names as old-fashioned and likely to alienate big corporate investors, wanted to buy out the Names to improve profitability after years of multi-billion pound losses.

The buyout plan, which was expected to run into hundreds of millions of pounds, was to have been underwritten by the agents who manage Lloyd's underwriting syndicates. But even these large groups baulked at the cost.

Several companies operating at Lloyd's face financial pressure because of huge losses in recent years coupled with the huge claims arising from 11 September. Others are keen to use all their available capital to support underwriting at a time when premiums are soaring, giving them the chance of their biggest profits for years.

According to the Association of Lloyd's Names, which represents the largest group of individual investors, the plan to drive them out by 2005 now looks dead. A spokesman said: 'There is no realistic expectation of Names receiving a cash payment this summer or autumn as a result of such a buyout.'

But the association believes that Lloyd's will try to revive the buyout plans at some stage.