Lloyd's of London said Friday it has received enough support from money-losing investors to proceed with a restructuring that will keep the 308-year-old insurance market solvent.
Lloyd's has spent many months changing the way it does business and working on the survival plan, which is intended to reverse the troubles of 1988-92, when the market was hit by $12.4 billion in losses."We should never forget what has happened," Lloyd's chairman David Rowland said, after the market completed the crucial and controversial step toward ensuring its own future.
Lloyd's investors were devastated by losses brought on by asbestos and pollution claims as well as natural disasters. They were required to put their entire life savings on the line to back policies at Lloyd's.
Many refused to pay, saying they had been victimized by unscrupulous insiders at Lloyd's. Hundreds sued.
Lloyd's sought to end the mess by offering the investors, known as "names," a $4.8 billion package that would cut their losses in return for their agreement to end all litigation.
Lloyd's has received the acceptance of 91 percent of the 34,000 investors and said Friday it would extend the deadline for stragglers until noon Sept. 11.
Lloyd's faces two additional steps before the restructuring is complete:
-Approval of the plan by the board of Equitas, which must be satisfied that Lloyd's has arranged adequate financing to handle all old claims.
-Approval from Britain's Department of Trade and Industry, which requires Lloyd's to show every year it is solvent. Lloyd's has said that if the restructuring plan failed, it would be insolvent by the end of the month.
Lloyd's hopes to complete these steps quickly, perhaps by next week.
Lloyd's has threatened to sue any investors who do not agree to the restructuring plan for their full debts, and some investors have threatened to strike back with fraud lawsuits.