The Times (London) , Sept 29, 2001 p24
Lloyd's demands higher levy from syndicates. (Business)
By James Moore
LLOYD's of London has demanded a huge increase in the amount its 108 syndicates contribute to its central fund amid fears of widespread failures among weaker syndicates.
The insurance market has increased the levy from 1.1 per cent of premiums to 2 per cent. The fee is paid monthly. An annual levy of 1 per cent of capacity is unchanged.
A spokesman for the market yesterday admitted that the decision was partly prompted by the estimated Pounds 1.3 billion claim it faces from the US terrorist attacks. The new rate comes into force from next year and will last until 2003.
The Lloyd's central fund comes into play in the event of the failure of a capital provider to one or more syndicates. It currently holds cash and securities worth Pounds 330 million and a reinsurance policy worth up to Pounds 500 million. A further Pounds 300 million can be called from members of Lloyd's.
Sax Riley, Lloyd's chairman, said: "This is an exercise in enhancing the market's financial security for the future."
Yesterday Cox, a quoted Lloyd's insurer, became the latest to suspend its dividend despite announcing a first-half operating profit of Pounds 23.9 million, up from Pounds 16.3 million last time. The figures are smoothed to take account of volatile investment returns. The pre-tax figure shows a loss of Pounds 11 million. Cox estimated its exposure to the US tragedy at Pounds 30 million. Goshawk reported an adjusted profit of Pounds 2.7 million against Pounds 4.2 million last time. It retained its dividend at 1.4p despite a Pounds 13.7 million exposure to the US attacks.