"Confessions of a Market Insider"

Assistant Attorney General
Utah Attorney General
160 East 300 South, 5th Floor
Salt Lake City, UT 84114
Telephone: (801) 366-0310
Facsimile: (801) 366-0315

Attorneys for Plaintiff


Division of Securities of the Department of Commerce,



LLOYD'S, a.k.a LLOYD'S OF LONDON, a corporation,
and its agents and representatives;



CASE NO. 960902920CV
JUDGE: Glenn K. Iwasaki


I, ROGER WALTER SLEIGH BRADLEY, make oath and say as follows:

A. Background

  1. I, Roger Walter Sleigh Bradley of 45 Hillcrest Road, Purley, Surrey CR8 2JF am a retired Lloyd's Underwriter with a background of 41 years of my working life spent in the insurance industry, 26 of which were spent at Lloyd's.
  2. I first went to Lloyd's in 1957 when I joined Lloyd's as the third man in the E H W Hayward box. In October 1962, I was appointed Marine Underwriter with NEMGIA Limited. Later, in October 1967, I was invited by Peter Green to join him as an underwriter with Janson Green Limited.
  3. I stayed at Janson Green until October 1977 when I was invited by Mr. Bryan P. Barrie to be his equal partner and active joint underwriter in Bryan P. Barrie Underwriting Agencies Limited. In January 1980, I continued being the active underwriter on syndicate 921 R W S Bradley and others. In November 1986 I retired from active underwriting. I retired as a Director of Bradley Gascoine Underwriting Agencies Limited in December 1988.

B. The Asbestos Problem

I. Conversation with Ralph Rokeby-Johnson

  1. During my time at Lloyd's, I began to become aware of the potential dangers to the Lloyd's market posed by asbestos liability claims in the United States. Whilst I had been aware from the late 1960s that claims were being made in the United States in respect of asbestos risks, it was not until 1973 that I became aware in general terms of the possible scale of such claims and the potentially devastating effect which they could have on the Lloyd's market, where many of these risks were insured and reinsured.
  2. On 4th October 1973, I played in the Lloyd's Golf Club Autumn meeting at Walton Heath. My opponent was Ralph Rokeby-Johnson, a leading Non-Marine Underwriter with the Sturge Agency. Ralph Rokeby-Johnson asked me during the course of the match the following question: "Has Green got all his reinsurance for asbestosis in place and has he got enough of it? Has he got it placed offshore?"
  3. The Green referred to was of course Peter Green for whose Syndicate, Janson Green, I had been underwriting for 6 years at the time. I was surprised by this question and gave a fairly non-committal response which was that Peter Green seemed relaxed. Later on, Ralph Rokeby-Johnson asked me if he had upset me. I said that he had not and asked him to tell me more.
  4. It was at this point that Ralph Rokeby-Johnson spoke to me in the terms which I shall never forget which were as follows: "What I can tell you, my friend, is that asbestosis is going to change the wealth of nations. Lloyd's will probably be bankrupted in the final chapter unless something happens to intervene, i.e. the Government via the Bank of England or legal duress on the Americans, but it will happen and we cannot stop it." Ralph Rokeby-Johnson spoke of possible claims of $66 billion by 1990 and $120 billion by the year 2000. These figures have now been confirmed as being the same figures as those in the Selikoff Report of 1964, the first of two reports by Dr. Irving Selikoff of the Mount Sinai School of Medicine in New York into the problems caused by exposure to asbestos. Clearly, Ralph Rokeby-Johnson was well aware of this report. I, however, like the vast majority of Underwriters, had not and still have not seen that Report. After the golf match at Walton Heath, at drinks, I approached Ralph Rokeby-Johnson because I was now intrigued with the situation he had revealed. Essentially, I asked him: "How do you know your estimates are on targets?" Ralph Rokeby-Johnson was irritated at this: "I don't know; it is only a judgment. Six billion dollars or $66 billion, it all depends on asbestos in buildings and how many time bombs there are". "What are time bombs?" I asked. With a pained expression, because of my background as a "mariner" underwriter floundering in "non-mariner" country, he explained: "Time bombs are victims walking, sleeping, talking, who are living but have lung cancer. When they die, as they will do up to the year A.D. 2000, the lawyers are going to have a field day. We don't know how many are affected. They don't know yet. So pick a figure, but it won't be far off, I have told you".
  5. What Ralph Rokeby-Johnson knew was that the policies written by Lloyd's in respect of American liability risks since the 1950s were largely unlimited i.e. they had no aggregate exposure limits and apparently contained no exclusion clauses in respect of asbestos related diseases. A huge number of claims were being made in the US courts against asbestos manufacturers under their public liability policies and these claims would sooner or later burst through onto the Lloyd's market.
  6. I spoke to Bill Maitland, fellow Underwriter at Janson Green, the next day about my conversation with Ralph Rokeby-Johnson on the golf course. He disappeared for a few hours and then came back. He told me that if I were asked about asbestos, I should refer the matter to Peter Green, who later became Deputy Chairman of Lloyd's and subsequently Chairman. He had clearly spoken to Peter Green and told me not to worry and that the situation was being closely watched.
  7. It was 1975 and after when claims advised by Sedgwicks in relation to a US company called Bell Asbestos started to hit the London Market. Even then, however, the vast majority of the market were unaware of the size of the asbestos problem.

II. Visit to New York

  1. In September 1979 I was fortunate to be selected as one of twelve invitees, underwriters, brokers and Corporation of Lloyd's staff, to visit New York insurance market under the auspices of the Keith Brown Foundation Fund.
  2. It was a memorable visit which I found to be of a great personal benefit in understanding the operation of the interplay between the marine and non-marine market.
  3. This was also a significant period for Lloyd's in general and the asbestos problem in particular. In 1978 Lloyd's had decided to relocate service departments to Gun Wharf at Chatham and to redevelop the 1928 building. Clearly the scene was being set for a massive increase in the number of Names and an increased volume of business to be written, the reason for which I now believe to be, at least in part, the knowledge by those at the very top of the Lloyd's hierarchy that the scale of the asbestos problem was such that it could affect the market unless new Names were drafted in to help "mop up" the losses.
  4. Also in 1978, there loomed from America a potential disaster scenario of asbestos liability springing from various US Courts where cases were being filed and judgments given. In particular, judgment was given in the case of INA -v- Forty-Eight Insulators Inc. which held that liability in relation to asbestos risks arises on an exposure basis. In the same year, the cases of Eagle Picher Inc -v - Liberty Mutual Insurance Co. which eventually held in favor of the manifestation theory and Keene Corporation -v- INA which decided that the insured could collect on both an exposure and manifestation basis i.e. the "tripple trigger" were filed. The latter judgment could cause Lloyd's insolvency by itself.
  5. In April 1978, an article on asbestos exposure by J. A. Califano jnr, Secretary of Health, Education and Welfare of the United States reported that 67,000 people each year would die from exposure to asbestos products during the rest of the 20th Century. The article stated that it was known that between 8,000,000 and 11,000,000 workers had been exposed to asbestos in the United States since the beginning of World War II and of this group 4.5M had worked with asbestos-contained insulation materials in shipyards. Most of the shipyard workers had been exposed to asbestos and it was estimated by the United States Government that one third of all those heavily exposed to asbestos had died or were likely to die of asbestos-related diseases. The US Government also instructed the US Surgeon-General to send an advisory letter to all 400,000 physicians in the USA describing the health risk posed by asbestos.
  6. This report was, I believe, picked up by LeBoeuf Lamb Leiby & MacRae, Lloyd's US attorneys, and passed to Lloyd's via the Lloyd's Underwriters Non-Marine Association, a powerful market association whose members included the major Non-Marine Underwriters of the time It was never published. Bearing in mind that Doctor Irving Selikoff of the Mount Sinai School of Medicine in New York, an expert on the subject of asbestos, in 1964 stated that asbestos-induced diseases and cancers took upwards of 40 years to manifest themselves, the outlook for Lloyd's in 1978 was grim.
  7. At the same time, many adverse reports on asbestos liability claims produced in the United States were surfacing but being suppressed from market consumption. Quite clearly underwriters were realising their reserves both offshore and onshore to pass solvency on their 1979 accounts. In reality, their reserves were gone and the Central Guarantee Fund was almost naked.
  8. It was against this background that I left for New York in September 1979. I was well aware of the depressing underwriting scenario evident to all but I wanted to find out for myself the possible ravages of asbestos which I recognised as "packaged fog" and needed to search for answers to my doubts and ignorance.
  9. I had resigned from Janson Green in 1977 and, suspecting that they, one day, were going to have problems with latent disease and pollution claims, I wanted to make sure that any Non-Marine liability business that I wrote for the relatively new Bryan Barrie syndicates, namely 901 and 921 were as free as possible from such unwelcome claims. Ralph Rokeby-Johnson's asbestos warning of 4th October 1973 to me, at Walton Heath Golf Club, was still fresh in my memory.
  10. It was at a committee meeting of the Keith Brown Foundation, when I and the other committee members were discussing the impending visit to New York that it was decided that each of the 12 visitors sent to New York would choose a subject before leaving and write a report on it on return to London.
  11. I remember that Alan Parry was in the Chair and others present were Charles Skey and Stephen Merrett together with Phil Johnson from the Corporation staff as Secretary. It was agreed that I should be in the party to go.
  12. When I was asked what the subject of my research was to be, I stated that my subject should really be Nuclear Insurance but that what I should prefer to do would be to delve into the asbestos scenario and possibly the pollution aspect as well.
  13. The reaction from Charles Skey, a senior underwriter and Lloyd's Committee member, was electric: "Oh for heavens sake don't do that please", he said. "We know all about asbestos. Whatever you do don't go stirring up the Americans on that one. Leave it well alone". I was surprised at this outburst and replied, "OK, I'll make it Nuclear Insurance". "That's better", said Charles Skey.
  14. After the meeting I remarked to Alan Parry, "My gosh, I certainly upset Charles didn't I?" Alan laughed and replied that it was after all a sensitive issue. However my mind was made up. Asbestos it was to be, even if softly softly.
  15. A few days later before setting out, Peter Green gave us a small sending off party, to wish us God speed, on the second floor. He came up to me and said he was glad I was going, no doubt impishly, bearing in mind that in all the ten years that I had worked for him in the Box he had never sent me once to the USA although I had been handling US business every day.
  16. I mentioned to him that I was going to do a report on Nuclear Insurance. He smiled and said nothing and then I said I was going to delve very quietly into the asbestos scenario. He paused for thought, studied me and remarked that that would be "interesting no doubt" and then moved down the line of us.
  17. During my visit, we were all given a choice to spend a day with anyone we liked. I chose to spend the day at Citibank. Tom Hitchcock, the Manager, introduced me to Philippe A Humbert, Vice President, and Nicholas A Jones of the Senior Accountant's office. I spent a fascinating day with them, discussing US banking for Lloyd's.
  18. After meeting Tom Hitchcock in the offices of Citibank I had dinner with him. We discussed the level of claims that were likely to be received by Lloyd's in view of asbestos liabilities. Hitchcock knew, and I knew, that in the future very substantial claims indeed would be received by Lloyd's. I had been speaking to insurance underwriters and brokers earlier in the week. They told me that asbestos claims were likely to be of such a magnitude that the claims would be horrific.
  19. We had no idea of the cost of claims to Lloyd's. We were not able to calculate the amount at that stage. The number of claims seemed to be growing, was very large and appeared to be without limit. It was quite impossible at that stage to forecast the number of claims that would be made in respect of asbestos damage. The amount of each claim had been calculated within a certain range. The crucial question was the number of claims that would be made that would be fed through to the Lloyd's market. This was not known to us.
  20. We were speaking in general terms, Underwriter to Banker. We were both concerned in relation to the number and amount of claims that would be received. Hitchcock said to me that, if every claim known to be out there as a liability for Lloyd's were to be delivered and became payable the next day, there simply would not be sufficient money in the Lloyd's American Trust Fund ("LATF") to meet all liabilities.
  21. Hitchcock said, and I accepted and agreed, that the claims that had been incurred, but were not reported or presented to Lloyd's would inevitably be received over a period of time. It was simply a question of time. Hitchcock said that he was aware that there were insufficient funds to meet all claims in total on one day if presented together. That would not, of course, happen in the real world. Hitchcock therefore suggested and I agreed with him that the only way out of the crisis for Lloyd's would be for Lloyd's to try to increase its capital base by recruiting more Names. We were after all getting a new and much larger Lloyd's and therefore needed more Names to justify and pay for it.
  22. We attempted to work some figures out, on the back of a napkin. We knew that there were approximately 17,300 Names at Lloyd's in 1979 and that did not appear to be anywhere near enough to provide capital sufficient to meet the asbestos claims.
  23. We tried to work out the sort of capital requirement that Lloyd's should aim to achieve in coming years. We did some calculations based on the average line that a new Name would write and the amount of deposit that would have to be made. At the time, there was no minimum liability per Name but the maximum liability that a Name could take by way of premium income was 350,000. The average would be somewhere in between. At that time, it was necessary to deposit one fifth of the premium income limit written in any one year with Lloyd's.
  24. It was the deposits made in respect of writings that would provide capital to Lloyd's, or even the doubling up of existing premium levels of members of Lloyd's to increase underwriting capacity.
  25. We also thought about the amount of money deposited in the LATF. This fund comprised cash in US and Canadian dollars and some investments, in aggregate of about $4 billion. The proportion of the LATF in the US$ was, I believe, some $2.93 billion.
  26. This seemed to Hitchcock to be woefully inadequate. We were talking in terms of possibly trebling the amount deposited in LATF to a figure of US $12 billion, or even more if possible.
  27. We tried to calculate the number of Names that would have to be recruited to Lloyd's to make sufficient deposits to provide the additional capital needed to increase the deposit in the LATF. We did not calculate precisely the number of Names that Lloyd's should seek to recruit. Nonetheless, it was plain to Hitchcock and to me that Lloyd's would have to look for many many more Names. We talked in terms of 25,000, 50,000 or possibly even 100,000 as a goal. I jokingly added "what about even 250,000?" He laughed and replied "Yes, why not?"
  28. This conversation came back to me years later when I read a copy of the speech delivered by Robert Kiln, a senior Lloyd's Committee member throughout most of the 1970s, delivered at a City Financial Conference in early 1981. In this speech, Mr. Kiln stated that Lloyd's might well have 50,000 members by the 1990s. At the time of the speech, Lloyd's had only 19,089 Names. To many people, the suggestion that Lloyd's would more than double in size in 10 years would have seemed highly unlikely but not to Bob Kiln. I believe that Bob Kiln, like other senior Lloyd's personnel, must have been well aware of the scale of the asbestos problem and the consequent urgent need to attract new Names when he gave his speech in 1981.
  29. Mr. Hitchcock and I had a very serious conversation relating to Lloyd's US operations and solvency that went on, not only in the evening, but in the day time with his two brilliant assistants. I learnt more about Lloyd's financial operations in America than on any previous visit to New York.
  30. On the flight home I became sad to realise that, in order to find out what was going on in US insurance circles, there was no way, other than going there physically, that I, in my position as an ordinary underwriter, could find out.
  31. I then realised, with irritation, what a tremendous advantage the "Seniors" at Lloyd's enjoyed with their syndicate paid for visits, how they could acquire knowledge and then keep it to themselves. It is the deputy underwriters and the Names (external especially) who suffered.
  32. Because I did not realise what was going on, namely the suppression of Attorneys' Reports from the US by Lloyd's "Centre" and because I believed the successive Chairman of Lloyd's speeches delivered at Lloyd's AGMs at which no mention of asbestos pollution was made, I thought that, notwithstanding the size of the problem, everything was all right.
  33. I never "reported" back to Peter Green on my "asbestos" findings but I knew that there was no need to do so since, as Deputy Chairman of Lloyd's, and subsequently Chairman, he would have been well informed of the situation. I did, however, mention what I had found out about the huge impending asbestos liabilities which would soon be cascading into the Lloyd's market to a few people, including Murray Lawrence, later Deputy Chairman of Lloyd's, and Ralph Rokeby-Johnson. They listened very quietly to all I had to say but did not really comment. Ralph Rokeby-Johnson did however tell me that there was already an unofficial asbestos working party looking into the asbestos problem. This later became an official Asbestos Working Party in August 1980.

C. Closing of the 1979 Year of Account

  1. A few years after, in 1982, I was the joint Underwriter of Bryan Barrie Underwriting Agencies Limited. Bryan Barrie and I wished to leave the 1979 year of account open as we considered that the losses would exceed premium income, but that we would show a profit in 1980, (which we did) and make up for it. We were a new Syndicate and hence had minimum reserves.
  2. Our Finance Director at Bryan Barrie Underwriting Agencies Limited was Peter Dixon. I told Peter that Barrie and I proposed to leave the 1979 year of account open. Bryan Barrie and I had done our calculations and had decided that the 1979 year should be left open.
  3. Peter Dixon said to me "I have been talking to your old mucker, Peter Green" who had said, "Peter try to get Bryan and Roger to close their 1979 year of account". Dixon said, "So you Roger must close it, you have been recommended to by Green, your old boss".
  4. As a consequence, against our better judgment, we thought that we should do as the Chairman of Lloyd's recommended. Consequently we closed the 1979 year of account, although we did not believe that we had sufficient reserves to do so, and so called upon the Names to pay the "loss".
  5. I subsequently felt very let down in June 1982 when I learnt that Peter Dixon left the 1979 year open on other Syndicates that I was on, namely Syndicates 918 and 157, being the non-marine Syndicates of the PCW Group, for which he was also the Finance Director. It seemed one law for 901 and 921 and another for 918 and 157, pragmatic purposes to rule before equality considerations to the same Name, as I was involved in both camps.
  6. Evidence now to hand, elsewhere, does more than suggest that the 1979 year of account had to be closed to secure the safe passage of the new Lloyd's Bill in July 1982, and that certain "knowledgeable" senior underwriters used unlimited run offs place at Lloyd's to assist them in passing solvency, all syndicate reserves having been seriously depleted by previous years adverse trading.
  7. Again, it is quite clear that the "Seniors" at Lloyd's used their position to benefit their own syndicates. The rue-off policies placed by the "Seniors" were effected largely to off-load asbestos liabilities. Many of the Seniors who placed unlimited run-off policies were on the Committee of Lloyd's or on the Asbestos Working Party, the formal body set up in August 1980, to co-ordinate Underwriters' response to the US asbestos liability problem and to provide the market with information, such body replacing the informal asbestos working party which Ralph Rokeby-Johnson had referred to on my return from New York in September 1979.
  8. Many of these Seniors such as Charles Skey, Ralph Rokeby-Johnson, Murray Lawrence and Don Tayler were underwriters on syndicates which had huge asbestos liabilities. Whilst I and no doubt others were recommended to close our 1979 year of account, the "Seniors" off-loaded the liabilities of their own syndicates via the run-off contracts which they placed onto underwriters who were not privy to the information which they themselves had.
  9. In this way, liabilities in respect of syndicates which had closed their 1979 year of account when they should not have done so were passed on to future Names which should not have been so passed, just as the Seniors themselves passed on their own liabilities via the run-off contracts which they placed. I believe that this was done to postpone the "coming home to roost" of the huge problems which Lloyd's faced, many of them asbestos-related, in order to ensure that the Lloyd's Act 1982 was passed.

I confirm that this statement is true to the best of my knowledge and belief.



Sworn before me at this 29 day of July 1996

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