Bain report could spell the end for Names

A report published tomorrow on the future of Lloyd's will call for the end of Names' investment in the market, according to senior market sources.

Patrick Moore, the deputy chairman of the Australian Association of Lloyd's Members (AALM), said the Bain Report would call for the Lloyd's market to be backed entirely by corporate capital.

Names currently provide £3bn of the £12.3bn capacity, according to the Association of Lloyd's Names.

It is thought the proposals will also suggest the end of three-year accounting.

Moore, who is also a committee member of the High Premium Group and principal of web advisory service Lisan, said Lloyd's chairman Sax Riley was likely to support the suggestion.

In April, Bain & Co began a review into the future strategy of the 300-year-old market.

The US-based management consultants worked closely with a high-level working party to discuss potential changes. The group, led by Riley, also included council members, members' agents, managing agents and chief executive Nick
Prettejohn.

"Sax Riley, who supported Names' cause, is likely to support their demise by meekly going along with the Bain recommendations," Moore said. "This is despite private capital providing about 25% of Lloyd's stamp capacity."

He predicted the report will suggest turning to corporate backing as the next seven to ten years will be extremely profitable. That way Lloyd's would be able to take over 100% of all underwriting profits.

Moore added the report cost £2.2m and sought "better ways of allocating capital" to "give credibility to ratings agencies".

Any changes recommended by the report will not take effect until the 2003 underwriting year at the earliest.

Lloyd's were unable to comment.