Letter, Robert Hiscox to Sir Peter Miller
12th May 1987
Thank you for your letter of the 7th May. I was stating the "outside' or Revenue view of the reinsurance to close which did appear to them an "incredible privilege". It was abused by some underwriters as the mass of rollovers demonstrated and some underwriters were carrying forward large sums of money more based on a wet finger in the wind than on any statistical basis.
However, that was not the point of my letter, neither was the alarm at the growing regulations within Lloyd's. That is a necessary result of having relatively poor names with unlimited liability. Of course they need massive protection -- especially given, as you say, the ignorance of the basic tenets of the laws of agency of some very senior agents including your predecessor in office. I find it a pity that you should preach to me on this subject considering my long opposition to the business methods of the man you used to refer to as "my illustrious predecessor" and to Posgate and others.
Just when the press was beginning to be more favourable to Lloyd's it is a tragedy that Sir Peter Green's sentence should be announced and be so light which has been very rightly criticized. I know that you will rush to state that this was the sentence of an independent regulatory authority -- but it should have been very different. "No charge against Sir Peter and Peter Valentine involved dishonesty or lack of good faith or deliberate or knowing Misconduct" I read in my newspapers. Why not?
We have seen people severely punished for repairing yachts at their syndicate's expense and other similar trivial offenses -- and yet we are seen to slap the wrist of a major offender. Clearly nobody tried to press the case against Sir Peter and when I read in my newspaper that Langton stated that such "behaviour was common practice in the 1970's and was not then regarded as serious enough to constitute discreditable or disgraceful misconduct" I am speechless. There were agents and underwriters who did not have baby syndicates or interests in offshore reinsurance companies and I suspect that they were in the majority. But to have the fact that many were breaking the law as any form of mitigating circumstance is deeply offensive to those that chose not to break the law. I always thought that ignorance of the law was no defence.
We have this new definition of "negligence" in Lloyd's. Posgate was found guilty of "gross negligence" for removing money from the syndicate which he did not own and paying it by way of reinsurance to the syndicate in the management of which he had a significant interest, and now Sir Peter is similarly found guilty of "serious or gross negligence" for allowing syndicate money to line his own pocket. When will somebody say theft and press the proper charges.
Enough of that matter. You state that the Council has debated the question of unlimited liability twice and committed itself to the continuation. The Council and former Committee of Lloyd's have a track record second to none for lack of foresight which has been well illustrated by the recent debacles in Lloyd's. Radical reform is out of the question until forced by circumstances, so let us continue to raise our capital from housewives with bank guarantees on the family home and suffer from the consequences at each downturn in the market.