Word: lloyds
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Reeling from financial pressure and haunted by the specter of suicides, thousands of Names agreed to a 1996 settlement Lloyd's concocted in response to legal actions and growing public outrage. Called Reconstruction and Renewal, the settlement created a reinsurance company known as Equitas that assumed responsibility for all of Lloyd's pre-1993 obligations. At the same time, Lloyd's reduced and capped the pre-1993 debts of Names who agreed to pay up and waive all claims against the company. But this global deal has raised more questions than it has answered. A committee of the House...
...disclosures of Lloyd's true financial condition set off a frenzy of lawsuits and government probes on both sides of the Atlantic. British police were swamped by reports of fraud. "We were hearing the same thing from every direction," a senior law-enforcement source told TIME. "There was worry that the whole insurance business of the U.K. could collapse." In Washington the Securities and Exchange Commission launched two separate investigations of Lloyd's in 1991, only to halt both a year later in what former chairman Richard Breeden describes as deference to British court actions...
...growing legal storm lashed Citibank in New York, where some $12 billion of Lloyd's North American reserves were on deposit. Paul Cohen, a supervising examiner for the New York State insurance department, declared in 1995 that the reserves were "seriously deficient" and "unlikely to cover all losses" at Lloyd's. Cohen accused Citibank of permitting Lloyd's to shift assets from the accounts of Names who owed nothing to pay the obligations of those Names who did--in violation of the Names' contracts with Lloyd's and trust agreements with Citibank. Citibank declined comment, citing pending litigation...
...Britain, Lloyd's has been protected by its own act of Parliament and by an abiding fear of the insurer's still formidable clout. "Lloyd's has more power than the government," says a knighted landowner and victim of a bad Lloyd's investment. "We are scared. People are frightened. This is not the England I knew...
...Even as Lloyd's deflected the lawsuits, it hounded its Names to pay the price. Some did. Roy Bromley, a ruined Name, balanced a shotgun on the ledge of open French windows at his London home and shot himself in the chest. Richard Burgoyne shot himself at his home in 1993--his wife and two sons, ages 8 and 11, found his body in their living room. Estimates of Lloyd's-related suicides range from a dozen to more than 30. The gentlemen at Lloyd's acknowledge only seven...