QBE calls for reform at Lloyd’s as members’ agents decline to recommend potential offer on Synd 386 - 25.07.07

Member's Agents and the Lloyd's 'Annual Venture' have been criticised as "archaic" by QBE as a result of Member's Agents declining to recommend a potential offer for the capacity on syndicate 386.

QBE would have offered Names on syndicate 386 an option of either immediate cash of £1.25 per £ of capacity, or £1.05 per £ of capacity and the right to participate on the syndicate for the 2008 and 2009 years.

Hampden’s Board reported to QBE yesterday that “it is not prepared to make a general recommendation in favour of the offer to our Members…”

Hampden welcomed QBE’s statement that Members will be able to remain on 386 “We are pleased to note your commitment to continue to welcome Names who choose to remain on Syndicate 386 as long-term investors.”

In today’s QBE Press Release Frank O'Halloran CEO of QBE Group is quoted as saying: “The Lloyd's agency and annual venture system is archaic and in our view in need of urgent reform.  I urge Lloyd¹s to address this with the same vigour that it has applied to modernisation of the market's business practices. We operate in 45 countries around the world, in many of which we have minority investors. There is no other market where the established custom allows intermediaries to exercise such influence, including actual decision making in respect of the pooled capacity, without reference to their principals. The system in our view also lacks proper transparency and contains far too many potential conflicts of interests.”

We will be writing to our members with a Bulletin setting out more background information and our response to QBE’s comment.