Vulture Fund's Threat to Sue Lloyd's Names over Asbestos Arouses Anger
Nov. 10--An American "vulture fund" is targeting Equitas -- the company set up to handle old claims for the Lloyd's of London insurance market -- by attempting to scare asbestosis sufferers into selling their claims against the UK operator.
Bermuda-based G-Risk also has an audacious plan to sue some of the most high-profile investors, or Names, at Lloyd's if it fails to extract enough money from Equitas.
G-Risk is offering to buy individual and company insurance claims at a discount. Asbestosis sufferers, who could wait for years for a settlement from Equitas, are frequently willing to sell their claims in return for immediate payouts.
G-Risk is attempting to secure more business by predicting that Equitas is almost certain to collapse into bankruptcy within the next two years. If that happened, claimants are likely to receive only a fraction of the money they were seeking.
The rate of asbestosis claims has accelerated in recent years, raising doubts over the long-term financial position of Equitas, whose accountants refuse each year to give it a clean bill of health. But one Equitas executive attacked G-Risk's approach. "These are not crack financial analysts,' he said. "They do not have any inside knowledge of our figures.
"They are simply trying to drive down the market in the hope that when they encourage people to sell a $1 million policy for the knock-down price of $150,000, they will make a big profit."
G-Risk, set up in January last year, said it used a network of global buyers and sellers of insurance that could give insured people tax benefits and an early exit route and also offered insurers "significant benefits."
Sources in the US insurance market suggest that G-Risk plans to combine thousands of asbestosis claims to take action against Equitas. If Equitas runs out of funds, G-Risk intends to pursue the claims against the Lloyd's investors who originally underwrote the risks. This could run to several thousand individuals for every claim.
But G-Risk plans to target high-profile investors, such as members of the Royal family, who would be keen to settle a lawsuit rather than being dragged through the courts. Prince Michael of Kent, for example, is known to be a Lloyd's investor.
The Equitas executive said: "They are trying to cash in on our misfortune and financial uncertainty.
"Worse, they are trying to scare some genuine asbestosis sufferers out of money that could be theirs.
"Claimants should seek good legal advice rather than selling up."