Lloyd's U.S. Trust Fund Transfer Complete

Lloyd's U.S. Trust Fund Transfer Complete

By E.E. Mazier

NU Online News Service, March 28, 3:57 p.m. EST?Lloyd's of London said today it has completed the transfer of more than $5 billion to its trust funds in the United States to provide for Sept. 11 claims.

Lloyd's has two major trust funds in the U.S. for reinsurance and surplus lines business.

The fund transfers began after the Sept. 11 terrorist attacks, and were essentially necessary to meet U.S. regulatory requirements regarding insurance claims arising from the attacks and relating to both direct business and U.S. ceded reinsurance business of Lloyd's.

The first part of the transfer, involving more than $2 billion, took place in November 2001.

The fact that Lloyd's did not transfer the full $5 billion at one time caused a stir among state insurance regulators.

While one committee of the National Association of Insurance Commissioners decided to allow Lloyd's to set aside only 60 percent of its share of the estimated costs last fall and to transfer the rest by March, others insisted on immediate full deposit.

When Lloyd's balked at this, some regulators started questioning Lloyd's solvency and ability to cover all of its obligations relating to the terrorist demolition of the World Trade Center.

In fact, the NAIC membership and the NAIC's Reinsurance Task Force discussed the need for conducting a full evaluation of the liquidity issues on a syndicate-by-syndicate basis before granting an extension to the entire Lloyd's market.

Several weeks ago, Reinsurance Task Force chair John Oxendine, who is also the Georgia insurance commissioner, revealed that the solvency review had been completed. He declined to unveil his findings at that time.

Lloyd's said that it continues to pay claims stemming from Sept. 11 and that to date it has received more than 3,200 claims.