A Lloyd's member supplying capital to a syndicate, historically an individual with unlimited liability, today overwhelmingly a corporate member with limited liability.
For three centuries Lloyd's capital was supplied by individuals, the Names, who pledged their entire wealth, down to the last cufflink in the customary phrase. That model gave the market considerable capacity for little tied-up capital, since the commitment rested on personal fortunes rather than paid-in funds. It was destroyed by the asbestos, pollution and health hazard losses of the 1980s, compounded by the London market retrocession spiral, which ruined thousands of Names and caused the worst crisis in the market's history. The reform that followed opened capital to corporate members in 1994, transferred pre-1993 liabilities into a dedicated run-off vehicle, and progressively reduced unlimited liability Names to a marginal share. The lesson carried beyond Lloyd's is general: underwriting capacity backed by unfunded commitments looks free for as long as no long tail materializes.
The Names crisis peaked between 1988 and 1992, with cumulative losses of several billion pounds and several thousand members ruined. The Reconstruction and Renewal plan carried out in 1996 transferred pre-1993 liabilities into the Equitas vehicle, and corporate capital, admitted from 1994, quickly became the majority: today's Lloyd's is financed almost entirely by corporate members.
Name, Names, membre à responsabilité illimitée, capital social du Lloyd's, corporate capital