LONDON (AP) â€” Lloyd's of London, one of the most trusted names in insurance, escaped a potentially crippling lawsuit when a judge ruled Friday that Lloyd's did not mislead or defraud investors by withholding information on a torrent of claims for asbestos-related illnesses.
Justice Peter Cresswell rejected claims by more than 200 investors, known as ``Names,'' that Lloyd's duped them by hiding the extent of its widening losses.
Cresswell's decision appears to have spared Lloyd's irreparable harm to its 312-year image as one of the world's premier insurance markets. If successful, the lawsuit might have opened the floodgates to claims of fraud from other Names who settled their debts with Lloyd's in 1996.
``It's a landmark decision that closes what is a pretty distant chapter in Lloyd's history. We are very pleased indeed,'' said Lloyd's chief executive Nick Prettejohn.
In his judgment, however, Cresswell heaped scorn on the market â€” if not the management â€” at Lloyd's.
``The catalogue of failings and incompetence in the 1980s by underwriters, managing agents, members' agents, and others is staggering and brought disgrace on one of the city's great markets,'' Cresswell said.
``External Names were the innocent victims of the failings and incompetence. Many Names have suffered enormously in financial and personal terms.''
Lloyd's is a self-regulating market of insurance syndicates rather than a company in its own right. It relies on more than 3,500 Names â€” mostly private individuals â€” plus some 200 companies who provide the money for underwriting insurance.
In successful syndicates, they earn annual returns; in troubled syndicates, they can lose all of their investment and be liable for a share of the overall loss.
When the trial opened in March, a lawyer for the plaintiffs alleged that Lloyd's concealed $6.3 billion in claims from asbestos-related illnesses and held only a fraction of that sum in reserve to cover its exposure.
Lloyd's lost $12.6 billion from 1988 to 1992, causing financial ruin for some of its investors who have an unlimited personal liability.
About 30 Names were reported to have killed themselves in recent years as a result of their losses.
``We're devastated. People like us are trying to survive with a nightmare situation,'' said Heather Adams, a housewife from Epsom, Surrey, who became a Name 22 years ago.
Since then, she and her husband Ken have paid 330,000 pounds ($478,000) to cover their losses. ``I'm surprised we're still together because financially, I'm a burden to anybody and everybody,'' she said after hearing the decision.
Cresswell, acknowledging such accounts, said a fair solution between Lloyd's and the Names who did not settle in 1996 was unlikely to be achieved without special assistance.
He urged Lloyd's to set up an independent panel of outside experts to assess what could be done to help those who are now in severe financial distress.
Many of the Names in the crowded courtroom at the Royal Courts of Justice burst into disbelieving laughter at the suggestion amid much ill will between the parties.
``We're clearly dismayed with today's judgment, but the judge was nonetheless highly critical of Lloyd's,'' said Sir William Jaffray, a Name who led the suit. ``Lloyd's does not come out of this case looking like an institution that any sane investor can trust.''
Prettejohn shrugged off Cresswell's criticism as ``nothing new'' and noted the justice's approval for internal reforms Lloyd's has made as a result of its earlier losses.
The suit, which sought damages up to $237 million, was filed by more than 230 Names, including 24 Americans.
The Names are expected to declare at a Nov. 24 hearing if they plan to appeal the ruling.
If they do appeal, Prettejohn suggested strongly that Lloyd's would refuse to set up the independent panel Cresswell suggested.
``The ball is in the Names' court,'' he said. ``They have to decide whether they want to have a constructive dialogue.''