Lloyd's plans to wipe out Names

LLOYD'S of London insurance market has unveiled controversial plans to modernise by ending its unique 300-year-old underwriting traditions.

Chairman Sax Riley wants to phase out the historic system where wealthy investors known as Names are liable for losses down to their last cufflink. Instead, they will have to join limited liability companies or partnerships, or quit altogether.

Under the proposals no new Names will be allowed to join. Existing investors will have to convert to limited liability by 2005.

Lloyd's, which faces £1.9bn World Trade Centre losses, will have to buy out Names to compensate them for losing their right to trade. It also wants to replace its archaic three-year accounting period with annual accounts, and to scrap the 'annual venture', where insurance syndicates last for only one year.

It also wants to become a franchise operation. 'It would be just like McDonald's, with the Council of Lloyd's at the centre and the syndicates as franchisees,' said a source. Riley said: 'Our aims are profitability, modernity and transparency.'

Analysts Chatset warned that losses in the past three years will be significantly higher than previously thought. It forecasts losses for 2000 at £1.6bn against the £1.5bn predicted by Lloyd's itself, followed by a £1.7bn loss for 2001.