Open year of account

In the early 1990s many Lloyd's syndicates were dragging along 1980s years of account that no successor syndicate would agree to close: US asbestos and pollution made their liabilities impossible to put a number on. Those years stayed open until Equitas took over everything from 1992 and earlier in 1996. The mechanism did not disappear with them. At the end of the third year, the managing agent has to propose a reinsurance to close at a price the syndicate actuary can defend, and that the next year of account, meaning other members, will agree to pay. If it cannot, because the estimation range is too wide on a class or an event, the year stays open. Its members remain on it, its Funds at Lloyd's stay locked, no final result is distributed, and the agent has to review each year whether closing has become possible. The choice is a trade-off between two groups of members. Closing at too low a price makes the next year pay; leaving it open keeps the problem with those who wrote it, at the cost of tied-up capital and blocked exits. Open years have become rare, and the run-off market has opened a door the Names never had: reinsurance to close can now be placed with a buyer outside the syndicate. An open year is still an admission, and the market reads it as one. Not to be confused with the year of account closed normally at thirty-six months, nor with a syndicate in run-off, which no longer writes business but may have closed all its years.