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All is not well at Equitas, the entity created to take over all those troublesome insurance claims that threatened to overwhelm Lloyd’s of London.

Sir David Rowland, the Lloyd’s chairman, spent months selling the Lloyd’s Names on the merits of a recovery plan, Reconstruction and Renewal. Names who subscribed to R&R would pay one last cheque to settle their losses at Lloyd’s.

No more cash calls. No more uncertainty. Equitas would act as a fire-wall between the new Lloyd’s and open-ended claims dating back half a century. Someone was being optimistic. Four years on, Equitas is effectively bust: a huge and unforeseen rise in US asbestosis claims has left it facing a huge cash crisis.

No-one knows just how big the final sum will be. The knock-on could even find its way back to 34,000 long-suffering Names who are technically reinsured into Equitas.

Where, one wonders, does this leave Sir David and his merry men? They will no doubt cite the actuaries saying that forecasts were accurate at the time. Yet there is evidence that Lloyd’s insiders were made aware of the dangers as far back as the early 1980s. And they continued to write business.

Even leaving the more extreme views aside, the whole basis on which R&R was crafted looks increasingly shaky. In May 1996, a ‘sweetened’ offer sliced #900m off the amount Names were being asked to contribute to Equitas.

Now it looks as though they should have been paying more, not less.

Sir David’s chief lieutenant through much of the negotiations was Peter Middleton, the former monk who ended up as Lloyd’s chief executive. He resigned some months before the deal was approved.

Middleton’s successor was there to see Rowland seal the success of R&R with three rings of the famous Lutine Bell. And he was? None other than Ron Sandler, the man appointed by the Treasury to lead an inquiry into UK retail financial services.

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