The Old Names may hear their death knell
By Andrew Cave, Associate City Editor (Filed: 18/03/2004)
Lloyd's of London's famous Lutine bell could be tolling for traditional Names, thanks to a concession that the Government is to grant on tax losses.
Unlimited liability underwriting brought Lloyd's to its knees in the late 1980s and early 1990s as traditional Names were unable to foot the huge bills for asbestos and environmental claims.
The market has been slowly switching to limited liability underwriting, but there are still 2,048 old-style Names, and in January 2002 they furiously rejected proposals that would have forced them to give up their unlimited liability status by 2005.
One of the key complaints was that conversion would have seen Names lose the ability to carry forward income tax losses and set them against their future underwriting income.
Lloyd's has been lobbying for a change in the law, and the Inland Revenue said yesterday that such a measure will be included in this year's Finance Bill. It said the move would affect individual Lloyd's members who convert to company status or to a Scottish limited partnership.
Lloyd's chairman Lord Levene said: "The changes to the tax rules will remove one of the last barriers to individual Lloyd's members converting to limited liability underwriting. As a result, Lloyd's members should get effectively the same tax treatment as already applies to other sole traders when they convert to limited liability."
Michael Deeny, of the Association of Lloyd's Members, said: "This will remove an important barrier to Names converting.
"They are not tax losses. They are real losses. We wrote real cheques for the World Trade Centre and we should be entitled to recover them."