Lloyd's, the UK insurance market, was cleared of fraud yesterday in a landmark ruling that could spell financial ruin for the 1,600 individual investors, known as Names, who still have outstanding debts of £50 million sterling.
However, London's High Court also urged the world's oldest insurance market to set up an independent panel to try to reach a final settlement with the Names who did not agree to the 1996 "reconstruction and renewal" plan accepted by 30,000 individual investors.
The investors faced big losses after US courts began making large compensation awards to workers suffering from asbestos-related diseases in the 1980s. By becoming Names, they had taken on unlimited liability, leaving them open to losing everything.
Following what he described as the largest and most complex piece of civil litigation ever seen in Britain, Mr Justice Cresswell said: "It is high time that the Lloyd's litigation and related litigation here and overseas came to an end."
Lloyd's seemed reluctant to agree to the judge's suggestion of an independent panel drawn from the legal profession, while promising that its ruling council would consider it carefully.
The court case, which opened in February, considered allegations by 230 Names that a systematic fraud was mounted by 33 members of Lloyd's committee. They claimed the committee members in day-to-day charge of the market concealed the extent of the asbestos-related losses totalling more than £4 billion. All claims were rejected by the High Court.
The judge said "the catalogue of failings and incompetence in the 1980s by underwriters, managing agents, members' agents and others was staggering" and brought disgrace on one of the City of London's great markets.
Lloyd's, which rejected any suggestions of settling with the Names, spent about £20 million on legal fees in its defence. Max Taylor, Lloyd's chairman, said there was now "absolutely no reason" why Names should not settle their debts.
