Lloyd's Name
A Lloyd's member who supplies capital to a syndicate. Historically an individual with unlimited liability, today overwhelmingly a corporate member with limited liability.
In 1996 the Reconstruction and Renewal plan took the liabilities of the 1992 and prior years of account out of Lloyd's and reinsured them into Equitas, which Berkshire Hathaway took over in 2006. That was the end of the Names model. For close to three centuries the market's capital had come from individuals who pledged their entire wealth, down to the last cufflink, as the phrase went. The model gave a great deal of capacity for little capital tied up, since the security was personal fortune rather than paid-in funds. It gave way under the asbestos, pollution and American health hazard losses of the 1980s. The LMX spiral made them worse: syndicates reinsured the same excess of loss losses round and round until they piled up with a few of them. Thousands of Names were ruined between 1988 and 1992. Corporate capital has been admitted since 1994 and soon took the majority; unlimited liability Names now account for a marginal share of capacity. The lesson travels beyond Lloyd's. Capacity backed by unfunded commitments looks free until the long tail comes through.
The Names crisis peaked between 1988 and 1992, with cumulative losses of several billion pounds and several thousand members ruined. In 1996 the Reconstruction and Renewal plan transferred pre-1993 liabilities into the Equitas vehicle. Corporate capital, admitted from 1994, quickly became the majority: today's Lloyd's is financed almost entirely by corporate members.
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