Word: lloyds
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...this Council that has orchestrated a conspiracy for more than two decades, says Sir William Jaffray, the lead Name in the upcoming London trial. "By the late 1970s," he told TIME, "the Committee [Council] of Lloyd's knew they were facing a crisis, and by 1982 the hierarchy knew that Lloyd's was bust. The only way they could keep going was to suppress the asbestos information, cook the books to ensure they were still showing profits, and go after new investors...
...TIME investigation tracked the alleged conspiracy through the labyrinthine structure of Lloyd's, which is not an insurance company like, say, Allstate, but a vast insurance exchange that evolved from Edward Lloyd's wharfside coffeehouse in the 17th century. As then, members bid for underwriting business, although today they do so from a four-story-high, block-square trading room in London. These underwriters form syndicates that are in turn backed by Names--investors who range from British notable Camilla Parker Bowles to U.S. business tycoons like Lufkin and Schwab, columnist Robert Novak, Supreme Court Justice Stephen Breyer and smaller...
Evidence in a number of lawsuits indicates that many new recruits wound up on syndicates that were heavily exposed to asbestos claims, allowing key insiders--including Murray Lawrence, a future chairman of Lloyd's, who would serve from 1988 to 1990--to quietly lay off their own risks. "It has been a classic Ponzi scheme, in my opinion," British investor John Finlay told a House of Commons committee...
...Lloyd's troubles began in the U.S., in Beaumont, Texas, where in 1969 a dying insulation installer named Clarence Borel sued 11 asbestos companies for failing to warn him about the hazards of handling the material. Four years later, a federal appeals court held the companies liable. The lawyers did the rest, opening the floodgates to damage claims that would eventually bring down huge asbestos companies like Johns Manville Corp., which restructured itself after a trip through bankruptcy court. The insurer of last resort--the party most exposed to the torrent of claims--was Lloyd's of London...
...withstand the financial exposure, the Jaffray suit says, Lloyd's launched its biggest recruitment drive ever. Veddy British recruiters fanned out across the U.S., enlisting the aid of big brokers like E.F. Hutton (now part of Citigroup) to line up prospects. The number of Names soared from about 6,000 in the mid-1960s to 14,000 in 1978 and exceeded 34,000 by the late 1980s. These were discount Names too, Lloyd's having lowered the net worth needed to become a Name to substantially below $1 million. The lower bar gave entry to investors such as Shirley Cook...