THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Saturday, July 20, 1996 TAG: 9607200208
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
LENGTH: 48 lines
Virginia's State Corporation Commission says it has reached an agreement with Lloyd's of London that reduces the obligations of Lloyd's members in Virginia by an average of 17 percent.
The companies' obligations to the London insurance institution could be reduced by as much as 23 percent if all other states participate in the agreement with Lloyd's, the SCC said.
Battered by billions of dollars of losses since the mid-1980s, Lloyd's has been trying to collect about $750 million pledged by thousands of American investors, including 26 investors in Virginia. Lloyd's has sought to recover at least $2.8 million from its members in Virginia.
Settling its disputes with state regulators and winning support from American members are crucial to Lloyd's, which has been trying to restructure itself and avoid insolvency.
When they joined Lloyd's, members had to demonstrate a significant net worth and promise to assume unlimited liability for any losses suffered by their insurance syndicates. But thousands of members, including several in Virginia, have refused to pay the assessments that Lloyd's levied against them.
In addition, many members accused Lloyd's of engaging in fraudulent behavior by failing to disclose the extent of Lloyd's liabilities for asbestos and pollution claims.
Securities regulators in Virginia and other states have contended that Lloyd's violated state laws by soliciting investors without registering Lloyd's memberships as securities.
The agreement proposed by Lloyd's does not bar members in Virginia from filing their own suits against Lloyd's, the SCC said.
If all 49 states with Lloyd's members participate in the agreement, Lloyd's has agreed to provide a pool of $62 million for reducing the obligations of its members in the United States.
The SCC's settlement is similar to one recently negotiated by the North American Securities Administrators Association, a group of state and provincial securities regulators in the United States and Canada.
Under a financial restructuring plan presented to its members last spring, Lloyd's offered measures that would reduce the combined obligations of its American members to $270 million. Lloyd's members have until the end of August to accept the plan.
Separately, Lloyd's said Friday that securities regulators in 38 states have accepted the North American Securities Administrators Association agreement to reduce the obligations of American investors. by CNB