Lloyds of London is collecting information about the payment history of the markets major reinsurers in an effort to determine the markets exposure to reinsurance failure risk.

Rolf Tolle, Lloyds franchise performance director, last week sent a letter to the markets 46 managing agencies enquiring about the performance of their “outwards reinsurance asset,” referring to reinsurance purchased by the market.

In the letter, which has been obtained by the National Underwriter, the reinsurers listed are: AXA, Berkshire Hathaway, CNA, GE Global Insurance [Employers Re], Hannover Re, Lloyds (inter-syndicate reinsurance), Montpelier Re, Munich Re, PXRE and White Mountains. A previous letter sent out in May inquired about the reinsurance payment performance of Swiss Re.

In last weeks letter, Mr. Tolle asked managing agents to notify him “of any current or recent (i.e., within the last six months) circumstances where any of these reinsurers (or a group company) is delaying or refusing payment (or has delayed or refused payment) on your outward reinsurance collections.”

Mr. Tolle also asked for the reasons given for the nonresponse, the general details of the types of contracts, the loss and the intermediaries involved.

“Equally, if you have no issues with any of these reinsurers, please confirm this in writing,” Mr. Tolle said in the letter.

A market source said that Lloyds is conducting a risk management exercise to discover the extent of its reinsurance exposure and whether such exposure needs to be reduced. “This is another example of the increased supervision which Lloyds is undertaking on the market,” the source said.

Reproduced from National Underwriter Edition, June 23, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.