CITY AND SUBURBAN
Cometh the hour and the man — here comes my bid for Lloyd's of London
CIIRISTOPHER FILDES
The bid for the Midland Bank has given me the inspiration I need. I intend to bid for Lloyd's. Not Lloyds the bank, which is a success story and priced accordingly, but Lloyd's of London, the insurance market, whose members in their present mood might pay me to take it away. Some of them, indeed, would have to. That is only one of the novelties of my proposal, which will need skilful financial engineers (I was thinking of Lazards or Hambro Magan) and an ally with a deep pocket — perhaps the Swiss Re. The concept, though, is sim- ple. Lloyd's, like the Midland, ig a financial business with a fine old name and a valu- able franchise, which went into a spiral of decline and has been trying to pull itself out — partly by its own efforts and partly on signs of improvement in its markets. That is the bidder's moment, as the Hongkong Bank (and Lloyds Bank too) saw when they looked at the Midland. The bidder for Lloyd's of London has had much of his homework done for him, free of charge, by his target. The report which the Council commissioned from David Row- land pinpoints Lloyd's weaknesses, and suggests remedies which a bidder could enforce. Costs come first. Lloyd's, which used to run rings round the clumsy insur- ance companies, is now 30 per cent out of line on costs. Too many mouths being fed too richly — indefensible in a business which is set to lose £1 billion. When I take over, there will be empty tables at the Marine Club. Rowland thinks that Lloyd's needs new capital from new sources, including companies. So it does, but it has not until now thought of my bid as a source. Rowland accepts that Lloyd's unique system of unlimited personal liabili- ty now does more harm than good, and has a complicated proposal which, in all but name, would end it. My proposal would end it more simply and at a stroke. Row- land says that Lloyd's needs to be run as a business, with a strong and businesslike board of management, with emphasis on marketing — quite so. Supervision, says Rowland, is another story and a different responsibility. Lloyd's ruling Council so dis- liked this split in its powers as to reject it out of hand, but is now having second thoughts. I am secretly having third thoughts. I would be prepared to trade off Lloyd's right to self-regulation against its commercial prosperity. If the protesters and politicians could be mollified by
putting Lloyd's under the wing of the Secu- rities and Investments Board, that might be a deal — perhaps in exchange for a tax regime which would help Lloyd's to build up reserves. Mark you, I would drive a hard bargain.
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