August 22, 2005

Dear Member:

Reflecting back on the 7 years since I became Chairman of the ANA, I am pleased to conclude that we, as a group of a couple hundred Names working together and pooling our resources, have succeeded in preventing Lloyd’s from collecting tens of millions of dollars in judgments by mounting a serious challenge to the unfairness of the process by which those judgments were obtained. The seriousness of this challenge has forced them to spend as much or more than they ultimately have managed to collect over many long years of litigation.

Lloyd’s did not anticipate this lengthy and costly battle, even though ANA management warned them this would occur during settlement discussions as far back as 1998 and as recently as July of 2004. It is indeed unfortunate that Lloyd’s misjudged our strength and resolve at almost every turn, resulting in unnecessary heartache and expense for themselves and ANA members.

It is sad, and to some degree frightening, that so many U.S. judges were willing to unquestioningly defer to British court procedures and decisions without regard to U.S. Names’ "guaranteed" Constitutional rights. One such right has, for centuries, entitled U.S. citizens to challenge the basis and amount of a debtor’s claim prior to the seizure of property.

Notwithstanding unambiguous Constitutional language and more than 200 years of precedent, however, in Lloyd’s v. Ashenden et al the 7^th Circuit Court of Appeals, in a misguided eagerness to support efficiency in international commerce, saw fit to invent an entirely new (lower) standard of protection for U.S. citizen debtors in relation to their foreign creditors. It called this new legal theory "International Due Process." ANA members who were compelled to pay Lloyd’s UK judgments, or purchase credit notes to satisfy principal and interest due, or bankrupt themselves are painfully aware that they were indeed denied their right to good ‘ole fashioned "Constitutional Due Process."

Ironically, some of the same U.S. Senators who were persuaded by Lloyd’s lobbyists and British government officials to remove language in earlier versions of the Bankruptcy Bill that guaranteed U.S. Names an evidentiary hearing on fraud prior to the recognition or enforcement of a judgment obtained in U.K. courts by Lloyd’s, are now complaining that non-U.S. citizens held in Guantanamo Bay, Cuba are being denied their right to due process. This situation is an outrage and must never be forgotten. The ANA is working on getting this and other aspects of our story put into print in the coming year.

Shettle’s Letter to ANA Members
Page two / 08-22-05

Proceeding on a parallel path with our defensive efforts have been offensive legal actions against Lloyd’s U.S. attorneys and bankers. Our patience and perseverance since the March 1996 filing of the case against LeBoeuf came to fruition last year, with virtually all our members receiving reasonable settlement checks. An equally long struggle in the Citibank case also yielded results in the past year. A second and final check for approximately 38% of the initial check is due to be sent to Citibank Class Members in September 2005.

We now find ourselves asking, "Will Lloyd’s or Equitas or the UK Treasury Department show up at some future date to attempt to extract more money from U.S. Names?" Legislation recently enacted by the U.K. Parliament indicates that HM Treasury is empowered to do just that if Equitas declares "proportionate cover" or the Lloyd’s market goes into "run-off." If the prerequisite circumstances arise, these recently redefined powers could be employed against ALL current and former Members of Lloyd’s worldwide. These developments were discussed at length during a recent, well-attended ANA meeting.

For numerous reasons, it is important for the ANA to maintain a base of operations containing important documents, up-to-date information of each member, and the ability to remain current on developments in English and American law that alone or in concert could adversely affect our members. Experience has shown too that from time to time circumstances arise that cause members to contact the ANA office for information, advice and referrals regarding Lloyd’s issues. As many will attest, the ANA is the ONLY source of thoroughly vetted and accurate information on Names’ issues.

The ANA Board feels that it is essential that the ANA maintain its operational capabilities at least through the coming fiscal year ending August 31, 2006. Our activities during the coming year beginning September 1, 2005 will be deliberate and measured, keeping within a modest budget. However, should opportunities or adverse developments arise that affect some or all of our members, the Board will evaluate the estimated costs and prospects for success before soliciting pro-rata financial support from those who could benefit from such endeavors. This a la carte funding approach allows us to operate with reduced annual dues, and has served us well in recent years. Our Equitas judgment defenses, orphan syndicate management and recent meeting in Chicago are good examples of the efficacy of this method for apportioning costs.

Although all appears calm at the moment, experience has taught us that the only certainty in the life of a Lloyd’s Name is that complex and adverse developments are usually just over the horizon. I hope that I am wrong and that this trend does not continue.

Shettle’s Letter to ANA Members
Page three / 08-22-05

During the coming year, I encourage you to remain vigilant, and to offer suggestions as to action items that ANA’s management and Board of Directors should consider addressing.

It is my pleasure to continue to be of service to such a supportive and appreciative group of members.

Very truly yours,

J.F. "Jack" Shettle, Sr.

Chairman