Lloyd’s itself is currently behaving like an old career criminal finally going straight. Shining morning faces are being presented to the world. There is much talk of a “transparent society,” of healthiness, efficiency, cost reductions. Peter Middleton points to the introduction of “simple management practice that passes for normal everywhere else.” Joint Deputy Chairman Robert Hiscox bullishly asserts that “we’re now lean, keen, and our overheads are bloody low.” A new business plan has been announced, radically reforming the investment base of the market. Insurance rates are hardening, there is work to be done, business to be written, a great institution to be saved; and in the meantime there is this bunch of dismissed peasants still whining at the gate about things that happened years ago. Lloyd’s insiders occasionally seem baffled at the way journalists and burnt Names willfully ignore what they see as the main story—how the market is to be saved—and ghoulishly concentrate on the past. In this respect, Lloyd’s is like a dowager wearing a necklace of herring. Her frock is new, her seams are straight, her makeup freshly applied: so why do people go on and on about the smell of herring?
As far as the Names are concerned, many offenses still rankle. For instance, when the burnt Names first started to organize, Lloyd’s was deliberately obstructive; until Peter Middleton changed the rules, action groups simply couldn’t discover who else was out there suffering in silence, assuming there was nothing to do except splint the upper lip. And each day seems to bring a new offense. Thus, the rescue plan for Lloyd’s depends upon getting corporate capital into the market for the first time, and it seductively offers this new money terms that seem to taunt the burnt Names: limited liability, plus protection from earlier market losses. It is as if the old Names, with their unlimited liability and open years, were being shunted off into a financial isolation ward for infectious cases. Another offense is the discovery that eleven years ago, auditors’ report stressing the unquantifiable losses likely to arise from asbestosis claims, the deputy chairman of Lloyd’s wrote to agents that they were “strongly advised to inform their Names of their involvement with asbestosis claims and the manner in which their syndicates’ current and potential liabilities have been covered.” Yet few Names, let alone those brought in after 1982, seem to have been warned about asbestosis. There is the discovery, all too late in the day, of who is for you and who against you. “I always thought my agent was on my side,” a farmer complained to me. “But they’re acting very like debt collectors. I suppose they’re afraid of Lloyd’s going bust and them losing their jobs.” Then there is the survey of company directors’ pay in the August 1993 issue of the magazine Labour Research: deficit millionaires (there are perhaps 400 or so owing over a million pounds, and 150 or more owing £2 million plus) might look askance at the salaries of some well-known Lloyd’s brokers. William Brown, chairman of Walsham Brothers, who made a fortune out of LMX reinsurance, last year was paid £3,653,346, a shocking 50.3 percent drop from what he had been paid the previous year. On the other hand, Matthew Harding, chairman of Benfield reinsurance brokers, got a 53 percent pay rise, taking him to £2,275,523. (Two other Benfield directors each earned more than £1,245,000.) In the face of such offense, and such market realities, expressions of anger such as that from the investor Alan Price, after a June 22 meeting at the Royal Festival Hall, are hardly surprising. “These underwriters should count themselves lucky that Lloyd’s is not based in the Middle East,” he said. “If it were, a large number of these wretches would now be walking around minus one hand. Some would be missing an arm and a leg.” A grim English humor survives even in these circumstances, an arm and a leg being exactly what many Lloyd’s Names have lost.
WHAT IS CURRENTLY going on is a face-off between Lloyd’s and its seventeen thousand rebellious Names. The argument has run roughly like this. Lloyd’s: Here’s your bill. Names: Can’t pay, won’t pay. Lloyd’s: You signed a legally binding contract to pay, so pay. Names: We’re suing for negligent handling of our affairs. Lloyd’s: Pay now, sue later. Names: No, sue now, pay later, and then only if the judgment goes against us. Lloyd’s: If you don’t pay now, Lloyd’s might collapse. Names: Don’t care. Lloyd’s: If we collapse, the policyholders will have to be paid first, so you won’t get any money; the only way you can benefit is if Lloyd’s keeps going, so pay. Names: Well, we might pay in October. Lloyd’s: But in September Lloyd’s has to satisfy the solvency requirement of the Department of Trade and Industry if it wants to keep trading. Names: Tough. Lloyd’s: You’re bluffing. Names: No, you’re bluffing.
One of those Names who would happily see Lloyd’s go into meltdown is ex-Squadron Leader Francis, whose bill of £972,000 for the year 1990 took him comfortably over the £2 million mark. He left the RAF in 1967 with a £1,500 gratuity, used it to buy a small apartment, and within a decade had become a property millionaire. Then he joined Lloyd’s. The obvious question to ask is: Given that he was such a successful businessman, how come he didn’t examine the deal he was being offered more closely? “Good point. The answer is: One’s normal critical faculties were completely dulled.” Now his coffee table is stacked with documents, press cuttings, and colored charts, while his phone overheats with Lime Street business. He seems not in the least ground down by it: a bronzed and energetic sixty-five-year-old, he reckons that “it’s probably put ten years on my life, all this extra activity.” Though now being forced by Lloyd’s to sell his handsome terraced house near Holland Park, he is at least self-sufficient. “I’m entirely responsible for myself No weeping wives in the corner, none of that. I’ve got no one I’m letting down by having perpetrated this. I’m pissed off about this house, quite frankly. But try being a Bosnian Muslim.”
Francis takes a reasonably philosophical view of his fate: “I have to admit, at the end of the day, who’s the fool who’s lost my money? Me.” But he is much less philosophical about the process by which the fool and his money were parted. In Francis’s analysis, there was a “tacit understanding among the top brass” about the potential losses from asbestosis claims. He doesn’t go so far as some who theorize about active conspiracy, a mafia, or the nefarious influence of the three Masonic lodges that exist inside Lloyd’s: “I don’t believe they all climbed into their aprons and said, ‘Let’s shaft the Names.’” On the other hand, he asserts that “the first eleven” in Lloyd’s knew about the dangers by 1980. He points to a 1979 meeting in America between eleven Lloyd’s underwriters and Citibank, at which upcoming claims were mooted. (This is a key Chinese-whispers moment in recent Lloyd’s history. Several people I spoke to knew someone who knew someone who was present at this meeting, when a Citibank official allegedly said that Lloyd’s would have to get in 10,000 or 50,000 or [fill in your number here up to 250,000] “little men who can be broken” to pay for what was coming down the track; but the speaker has never been identified or traced.) Francis points out that during the period between 1980 and 1989 not a single chairman of Lloyd’s mentioned the word asbestosis in his annual report. “I spent twenty years in the RAF,” he concludes. “You know, trust, honor—and then to find in such an august body a bunch of craven crooks.”
Francis, like all the burnt Names I talked to, had a few words of special dispraise for the Lloyd’s Hardship Committee, which exists, according to your point of view, either to protect Names from bankruptcy, draw a line under their liabilities, and make sure they can continue to live in modest comfort, or else to see that every last Irish sixpence is wrung out of them before depositing them like dishrags on the shores of destitution. There is something peculiarly infuriating for a Name who has seen one department of Lloyd’s devastate his or her capital having to come to another department to have the financial last rites read, and to be awarded a pittance on which to live. There is also something grimly piquant about the Hardship Committee’s address: Gun Wharf, Chatham. This, after all, is the Medway town where Dickens had his first experience of impoverishment and its attendant shames. He was five when his father moved the family here in 181
7; John Dickens, already in severe financial difficulty, had been offered a job in the Chatham dockyard. But the family’s fortunes didn’t prosper: they moved to a cheaper house in 1822, and left the town later that year, selling all their furniture before departure (and a year after that John Dickens was imprisoned for debt in the Marshalsea). Dickens’s first work Sketches by Boz, has a comic portrait of Mrs. Newnham, one of the family’s Chatham neighbors back in the 1820s: “Her name always heads the list of any benevolent subscriptions, and hers are always the most liberal donations to the Winter Coal and Soup Distribution Society. She subscribed twenty pounds towards the erection of an organ in our parish church, and was so overcome the first Sunday the children sang to it, that she was obliged to be carried out by the pew-opener.” Mrs. Newnham’s modern-day equivalent on the Chatham Winter Coal and Soup Distribution Society is Dr. Mary Archer, who chairs the Hardship Committee. She is also the wife of the airport novelist Jeffrey Archer, a preposterous and comic figure whom Thackeray would sketch better than Dickens, and who currently bustles around under the title Baron Archer of Weston-super-Mare. Lady Archer (“She prefers to be called Dr. Archer,” a voice at The Hardship advised) lists among her recreations in Who’s Who “picking up litter”—a pastime that Mrs. Thatcher once urged upon the nation in the course of a grotesque photo call—and perhaps there is an element of tidying the trash in Dr. Archer’s residency at Gun Wharf.
If Peter Middleton, the chief executive of Lloyd’s, is the one figure of whom the burnt Names uniformly speak well—praising his sympathy and his straightforwardness—then Dr. Archer is the one who catches the flak. Abuse, from casual to deeply considered, was all I heard from Names in the weeks before I met her: “Unctuous, holier-than-thou, and aren’t-we-doing-well?”; “That evil old bat” (this from a woman who was probably no younger); “Even a member of the Council said, ‘You could crack eggs on her.’” In part, this is normal rage at the figure head of a money-squeezing department; in part, the sort of comment that high-achieving and good-looking women frequently attract in British society. Lloyd’s probably thought it a canny PR move to put Dr. Archer in charge of The Hardship: not just a woman (therefore assumed to be abundantly sympathetic) and a Name herself since 1977, but also the wife of a Name who earlier in his career had known spectacular debt; she could be billed, therefore, as someone who had herself taken the medicine she was now dishing out. However, there is something about Dr. Archer that gets up people’s noses like a gigantic dose of snuff, and I have to admit that as I munched my sandwich lunch across a desk from her at Gun Wharf, while sunlit yachts cruised the Medway in the background, at least part of my mind was occupied with this issue. She is small, dark, pretty, poised, groomed, and very, very precise. She appears utterly in control (though a friend of mine once danced with her and claimed she was “a helpless child” in his arms). Perhaps it is the voice, which is pure bone china, or Cheltenham Ladies’ College. When my plastic thimble of near milk failed to turn my coffee much more than one shade away from ebony, she asked, attentively, “Would you like a second milk?” But it sounded, to my ears, more like “Are you sure that thumbscrew isn’t uncomfortable?” However, the only moment when I got any true handle on the reaction she provokes was when I mentioned that there was a good deal of resentment out there among her current constituency. “Resentment, anger, distress,” she replied. “All that is very understandable.” But she listed the nouns as if identifying base metals rather than volcanic emotions.
Her committee has a staff of twenty-eight (twenty case officers and eight administrators) and by August 3, 1993, had received 2, 327 applications from Lloyd’s Names. Of these, 906 had subsequently withdrawn their applications. This seems a remarkably high percentage. Two main factors explain it. First, a distaste for the process often sets in once its details are revealed (one sticking point is that a Name’s spouse must also make a full financial declaration to Lloyd’s). Second, going to The Hardship was initially seen as a very useful time-wasting exercise: once you had applied, your funds at Lloyd’s were frozen and could not be drawn down. This led also to various picturesque excuses for tardiness, of the sort not needed since schooldays: one Name claimed that he had run over his toes with his lawn-mower, as if this would obviously affect the form-filling phalanges at the other end of the body. The Hardship has since tightened its procedures, but even so progress is slow. Of the 1, 421 cases currently active, 361 have been examined and 328 Names have had a proposal made to them. Of these, 108 have accepted the settlement offered, though by August 3 a mere 7 cases had actually been signed and sealed.
“We are about avoiding bankruptcy and leaving the Name in an ongoing financial situation,” Dr. Archer says. Plights vary (especially when there is spouse wealth), but what this effectively means in the case of a single person is that the Name will have to hand over to Lloyd’s all his or her assets, assign any windfall money—inheritances, lucky days at the lottery—received over a three-year period, and sell anything other than “a modest and only home.” This is roughly estimated as one worth between £100,000 and £150,000, depending on region. Lloyd’s will take a charge on the Name’s house, which will be claimed after death. The Name will be allowed, again if single, something between £7,000 and £12,000 per year for the three-year period of the deal: anything earned above this figure is to be handed over. Finally, the settlement insists that Lloyd’s can claim money from the Name after the three years are over if it is Lloyd’s-related money: profit from open years, profit from stop-loss policies, or money received after Lloyd’s has been successfully sued. This last clause is especially unpalatable for some members: first, Lloyd’s loses your pot of gold through incompetence, then you go bust, then the Hardship Committee goes through your pockets, then your court case wins you back some of the money you shouldn’t have lost to begin with, whereupon The Hardship reappears and snatches that back off you too. I told Dr. Archer that the newspaper photograph of her in a Nicole Manier frock was being satirically circulated among the burnt Names, and she responded, with a mid-November smile, “I don’t blame them.”
What happens, I asked her, if you smell a rat? “If we smell a rat, we sniff around.” Business accounts might disclose complicated loans, or the Name might prove reluctant to let the committee talk to his bank. “But most of our Names are very straight,” she insists. “They are mostly modest people in distressed circumstances. They say, ‘Give me finality.’” A caseworker I talked to confirmed this: instances of attempted deceit seem rather minor and incompetent—a zero missing from an interest payment, or “putting down under expenses three television licenses on one property” (under British law you need only one license per property). Though the caseworker confirmed that “we still get a certain amount of bitterness creeping in, especially among the older Names who’ve lost their life savings,” the process, as described at Gun Wharf, is necessarily painful but comparatively untroubled: honorable Names seeking to have a line drawn under their troubles, trusting Lloyd’s even in their financial extinction, sheep coming docilely to the final shearing. This may indeed be the case—so far. It may be that the committee has only seen the smaller fry, a likelihood endorsed by the fact that half the Names coming to The Hardship have a bank guarantee on their house (the rule-bending way of showing wealth in the eighties). It may also be that only those least tempted by dishonesty have come forward as yet, or that feelings of rage weaken and fiendish plans seem less plausible when faced with the bureaucracy of Gun Wharf. There did, even so, seem a huge disparity between the view from the banks of the Medway and the opinions I heard among the burnt.
BUT THEN THE FURTHER you go into the Lloyd’s story, the deeper the incompatibility of views you meet. Names coming honorably to settlement, or Names doing their utmost to get off the hook? A decade of high-level Masonic conspiracy against the external Names, or just a decade of lolloping incompetence? A linked series of individual tragedies blasting its way like HIV through the upper-middle class, or merely a moral-fr
ee demonstration of “one lot of rich people stealing from another lot of rich people” (as a carbonized Name put it to me)? Assessing the true extent of the social and financial trauma is tricky. As you talk to Lloyd’s Names and those close to them, you frequently hear of depression, marital breakdown, even suicide; of estates being sold, children taken out of school, and vertiginous downward mobility. Occasionally, the stories have a comic edge: I was told of one Name whose vivid taste for serial marriage was finally quenched when, anticipating possible losses, he put all his assets in his wife’s name; now he lives in fretful dependence on a woman who would normally have passed her sell-by date. But mostly the tales are painful ones, often terminating in a statement like “an entire swath of English society has been wiped out.” If Lloyd’s melted down, and every member went bankrupt, such a statement would certainly be true: the membership still embroiled in one way or another is about thirty thousand, which happens to be roughly the number of entrants in the current edition of Who’s Who. But we are far from this figure at the moment. It must seem like “an entire swath” to Lloyd’s sufferers because Names tend to know other Names (that is, after all, how they became Names in the first place). “Wiped out” also has its gradations: sometimes a husband will have put his wife up as a member and stayed out of Lloyd’s himself, thereby limiting the family’s potential loss; while the “losses” are usually of those things—private education, second homes, skiing holidays—which seem to others gross and unwarranted social privileges in the first place. Finally, it’s hard to quantify loss after you factor in stiff-upper-lipdom. One Name who had been obliged to sell part of his prized book collection sanguinely quoted to me the dictum “Don’t cry over things that can’t cry for you.” And an underwriting agent told me of the following quintessential exchange he had overheard between two City gents as he was leaving his luncheon club. “How are you, old chap?” asked the first gent, to which the second, with a sad shake of the head, merely replied, “Lloyd’s, I’m afraid.”
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