Peter Levene had never worked in the insurance business before he was appointed to the position of Chairman for Lloyd’s of London in June 2002. He was England’s Chief of Defense Procurement in the late 1980’s and the Lord Mayor of London, among other things. But I can assure you he has never been a legend, or even a blip on the screen of anyone in the insurance world.

In other words, Lloyd’s has many billions of dollars in unmet obligations still remaining from the events of September 11. To speak of a fixed net loss figure, and refer to these claims as "handled" is deceptive, and notably side-steps saying that claims against Lloyd’s syndicates from 9/11 have not been paid in full.

It is neither possible, nor remotely credible to proclaim financial results for 2005 at this time.

The three hurricanes referred to occurred in the US between August and October 2005. As the attached Exhibit "B" illustrates, Lloyd’s syndicates continue to collect premium for at least 12 months following the close of a calendar year. Also, claims on their insurance policies and reinsurance contracts continue to be filed for a year or more after the end of the underwriting year of account (i.e. at least through the end of 2006 for the 2005 Y.O.A.).

Implying that profits from one year of account can be accumulated for the benefit of, or carried forward as reserves for subsequent years of account is totally misleading.

Only a small part (less than 2% of capacity) of a syndicate’s capital can be called upon to help defray unfunded losses of other syndicates. Beyond that, there is no mutualization of contractual obligations among Lloyd’s underwriters. The deposited and pledged funds of Lloyd’s underwriting Members (now mostly limited liability corporate investors) backing a given syndicate in a given year, plus a nominal amount of funds available in Lloyd’s Central (guarantee) Fund, are the limit of the monies available to pay claims resulting in that specific syndicate year of account.

Lloyd’s had little experience outside the marine insurance business until approximately 1900. Their first 200 years were spent primarily covering marine hulls and cargoes.

Quoting Lloyd’s former CEO Ian Hay Davison:

"Although Lloyd’s holds a pre-eminent position in the world’s marine and aviation insurance markets (In 1987 when his book was published, yes, but not today), this is not the case with non-marine business, where Lloyd’s share of the world’s market is under 1%."
("A View of the Room," p. 12, by Ian Hay Davison, CEO of Lloyd’s from 1983 to 1985).

Real property coverage is classified as a non-marine risk.

Is it not outrageous that Chairman Levene has publicly announced on your show that Lloyd’s does not take directions from regulators?

Lloyd’s has a history of promoting itself to regulators and analysts as being sui generis. Lloyd’s cloaks itself in ambiguous explanations of its uniqueness in order to persuade regulators it is either outside their purview, or too difficult for an outsider to understand, neither of which are true.

Lloyd’s simply wants to be left alone so its executives and syndicates can operate without anything more than token regulatory oversight, unlike its US-based competitors. This creates an unlevel playing field skewed to the disadvantage of independently audited, law-abiding US insurers and reinsurers. It also jeopardizes the security of Lloyd’s US policyholders, and US insurance companies that buy reinsurance from Lloyd’s syndicates and carry that reinsurance as an asset on their balance sheets.