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Member, Beacon International Group, Ltd.
To the editor: Your July 6 article, "Equitas Shield Questioned," presents an unreasonably gloomy view of the reinsurance company that Lloyd's established in 1996.
Philip Hertz, an attorney, is reported as saying that Equitas is vulnerable, not only to the asbestos, pollution and health-related liabilities that it reinsured, but also to "additional big exposures, such as tobacco and the Year 2000-related risks."
But wait a minute. Equitas reinsured exclusively the Lloyd's market's 1992 and prior-year liabilities. Its exposure to Year 2000-related risks, if it exists at all, is unlikely to be large.
And did not Chief Executive Officer Michael Crall, in Equitas' first report and accounts, clearly state the company's belief that "no significant tobacco-related claims against Equitas will arise?"
According to your report, Mr. Hertz argues that these liabilities pose a threat to Equitas, thus casting a pall over the ongoing Lloyd's market, though that has not prevented A.M. Best Co. and Standard & Poor's Corp. from awarding Lloyd's ratings of A and A+, respectively.
But if the liabilities cited by Mr. Hertz pose problems for Equitas, then they must surely spell doom for much of the world insurance industry. Now that would make an arresting headline.
William Pitt
Head of Communications
Lloyd's of America Ltd.
New York