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Member, Beacon International Group, Ltd.
LONDON-A group of individual investors in Lloyd's of London expects to hear this month if it can sue Lloyd's for fraud.
The decision is being sought by 350 Lloyd's names, who claim they were enticed to invest in the 1980s in syndicates Lloyd's knew were in line for major underwriting losses. The action is a response to Lloyd's own legal efforts begun last year to secure a London High Court judgment against names who have not participated in its 1996 settlement offer but who still are refusing to pay their share of past underwriting losses.
The names, backed by the United Names Organization, have sought a ruling from the judge that they have a right to bring a case against Lloyd's for alleged fraud. They claim that Lloyd's knew when names were recruited onto syndicates in the early 1980s that massive losses, mainly from U.S. asbestos and pollution claims, were in the pipeline.
If the names are successful in winning the right to take Lloyd's to court, another 1,500 non-paying names could join the action.
Lloyd's has maintained in a submission to the court that even if it were guilty of fraud, the names are not entitled to rescind their contracts with Lloyd's and that under the terms of these contracts they must "pay now, sue later."
David Harris, UNO co-chairman, said the names expect the judge to decide by the end of April whether there are grounds for a fraud trial. He said that it would then take about 12 to 18 months for the case to get to court.
He said he believed it would be "against all natural justice" for the judge to accept any of Lloyd's arguments for not allowing a fraud trial.