Equity Red Star vows to get back on track after Lloyd's rap

Equity Red Star today admitted it had blundered but promised a much-improved performance in its year-end results.

In the wake of today’s £95k Lloyd’s costs order and verbal rap on the knuckles, an Equity Syndicate Management Ltd (Equity) spokesman said: “In accepting the settlement, Equity’s team has acknowledged the previous process and management issues within its business, but welcomes the recognition from Lloyd’s for the substantial changes already implemented. This is demonstrated by the absence of any financial penalty from Lloyd’s apart from costs. The benefits of this programme are already starting to show in the business’s results.”

The spokesman said remedial action included:

• Beefing up management with a new claims director, active underwriter and stronger actuarial team. Management information systems have been improved.
• Exiting unprofitably broker relationships, including 300 broker relationships; cutting back on aggregators; private car and van business is no longer being written in the four largest-volume brokers.
• A review of all operations, including a claims review. This includes more detailed and transparent procedures for bodily injury claim estimation and better claims systems resulting in improved cost control and enhanced claims data, allowing the creation of better accident period information and improved reporting on claims development.

The spokesman added: “Equity’s new management team has worked co-operatively with Lloyd’s during this process and has acknowledged that its results were disappointing in an extremely challenging market environment. 

“While market conditions in the UK remain challenging, our new leadership team is working positively on the programme and we remain confident that the business will show a much-improved financial position in the financial year ending 30 June 2012.”