Lloyd's Faces $1.9 Billion US Cash Call On Nov 15

Thursday, October 4th, 2001 Legislation & Regulation Risk Management

Under U.S. regulatory requirements, Lloyd's next month will have to fund 100 percent of its gross liabilities from the World Trade Center attack--a price tag of £1.3 billion ($1.9 billion at current exchange rates), or the equivalent of 12 percent of the market's 2001 capacity. Even Lloyd's officials agree this could cause a short-term liquidity problem, but Lloyd's Chairman Sax Riley emphasizes that all requirements will be met. (Under U.S. regulations, all alien reinsurers are required to fund 100 percent of reinsurance gross liabilities, which are kept in the Lloyd's American Trust Fund in New York. After declaring gross liabilities, Lloyd's and other reinsurers must make a cash deposit to the trust fund by Nov. 15.)

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