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LONDON -- Lloyd's of London names that have been unable to close their accounts and leave the market now have a glimmer of hope.

Speaking at last month's meeting of names reinsured into Equitas Ltd., Equitas Chief Executive Officer Michael Crall told the names on 44 syndicates left open from the 1993 year of account onward that seven of these syndicates have been reinsured by other syndicates within the Lloyd's market. In addition, Lloyd's syndicates have issued reinsurance quotes to another 11 so-called orphan syndicates and quotes are being developed for 19 more.

Equitas is the runoff reinsurer for all Lloyd's pre-1993 liabilities and was an essential part of the market's reconstruction and renewal program.

Equitas also agreed to provide quotations on reinsurance-to-close for syndicates with years of account left open from the 1993 year of account onward, but only after the syndicates had been open for a period of 60 months.

Many of these orphan syndicates were left open because the syndicate stopped trading the year following the poor underwriting account, so there was no successor syndicate to reinsure the liabilities.

Many of these have since received what Mr. Crall described as "commercial, and in some cases rather aggressively competitive" quotes from other syndicates within the market.

However, four syndicates representing five years of account have not been able to close their books because of uncertainty over personal accident excess-of-loss business they wrote in 1993 and 1994, which is part of a retrocessional spiral. Those syndicates are: 103, 256, and 687 with the 1993 year open and 718 for with the 1993 and 1994 years of account open.

The underwriting report for one of these syndicates, aviation syndicate 256, now being run off by the Eastgate Group Ltd., explains how the problems arose.

For 1993, the last year of account the syndicate wrote, syndicate 256 had 5.6 million pounds ($8.3 million) in capacity.

According to the report, 96% of the syndicate's premium volume came from personal accident business; of that, 20% came from London market excess-of-loss business, commonly known as LMX.

At the time the report was prepared at the end of last year, the syndicate estimated that it was facing losses equal to 31% of its capacity before expenses were taken into account.

"The underlying reason for the deterioration and current cash flow problems is the participation of syndicate 256 in the so-called 'personal accident spiral' for 1993," states the report. "The fact that the syndicate did not participate at the lower end of the spiral is the major reason for the full impact becoming apparent only at a relatively late stage."

The report goes on to explain that the syndicates and London market companies involved in the business bought reinsurance protection on an excess-of-loss basis, generally above $5,000, though syndicate 256 bought excess of $10,000.

"All of this is standard insurance practice, but in this instance the direct insurers tended to reinsure each other, particularly at the lower layers of reinsurance protection," says the report, adding that the reinsurance had unlimited free reinstatements.

According to London market sources, the business currently winding round this personal accident retrocessional spiral originally came into the market from two North American life insurers: a unit of Manulife Financial Group and Sun Life Insurance Co. of America.

Although the book of business includes some big claims -- including the personal accident claim for Formula One driver Ayrton Senna, who died in a race crash in 1994 -- many of the losses are small, but of high frequency, and as a result are very expensive to administer.

Equitas' figures show that the four Lloyd's syndicates' reserves for the excess-of-loss personal accident reinsurance for these five years of account totaled 20.9 million pounds ($35.8 million) at the end of last year.

Accountants Ernst & Young L.L.P. have been contracted by a Lloyd's working party to look into the situation to come up with a reinsurance progression model to try and identify how the personal accident spiral operates -- and as a result possibly determine how to collapse it and close the open syndicates.

The administration costs on this type of low loss but high-frequency business, along with uncertainty over the reinsurance modeling process, have generally made the conventional Lloyd's reinsurance market for orphan syndicates back away, said Equitas' Mr. Crall. It is "likely (the syndicates) will end up being reinsured by Equitas," he said, adding that "maybe this should be the sort of thing reinsured into Equitas."

The U.K. Department of Trade and Industry would first have to approve Equitas' assumption of the risks.