ECA loses £26m in Lloyd’s insurance nightmare

Grant Prior 6 years ago
Share

The Electrical Contractors’ Association has lost at least £26m in a disastrous investment in the Lloyd’s insurance market.

The losses mean one of industry’s richest trade associations has been forced to cut costs and radically restructure the way it operates.

The disastrous Lloyd’s investment started in 2009 and lasted until November 2011.

It was sanctioned by former directors of the association and the current leadership team has been left to deal with the financial fall-out.

Documents seen by the Enquirer show the investment in a Lloyd’s syndicate has already racked-up £26m in losses.

But the association will also be liable for future losses while the underwritten policies are in a run-off period until 2014 with the ECA braced for another £5m hit.

The scale of the losses dwarfs the association’s annual subscription income of £4m from members.

One industry expert said: “The ECA has historically been one of the UK’s richest trade associations with a lot of property assets and profits from investments and its insurance operations accumulated over the years

“It’s not going to go under – they can manage even a hit this big.

“But they will have to look carefully at the cost base and reduce it significantly.”

The association has historically generated income from investments and its insurance scheme for contractors operated under the ECIC brand.

ECIC has paid a special £6m dividend to the association to cover some of the Lloyd’s losses.

Steve Bratt, CEO of the ECA told the Enquirer: “In 2009, we invested in a Lloyd’s syndicate and managing agency with a view to extending our insurance offering to our members.

“At that time, nobody  could have predicted the series of international natural disasters which were about to affect the insurance industry as a whole and as a result, our investment in that syndicate.

“Indeed, 2010 and 2011 were the worst ever losses recorded in  Lloyd’s history.

“To minimise further loss, the Association took the decision in November 2011 to exit from this market.

“The Association was already taking strides to close the gap on its reliance on profits from insurance operations and investment income and the Lloyd’s  experience has merely accelerated this process.

“As a result, we have made some very positive changes to our operating model and to our governance arrangements and as a consequence we are much stronger.

“We have a strong  asset base and are well capitalized. Furthermore, our A- rated insurance company, ECIC, shows good growth prospects.

“It is important to bear in mind that these are losses that are provided for in the accounts rather than fully realized and are not all cash related.

“As regards our members, they have not been directly affected by this and continue to enjoy the same level of service and benefits.”

Latest news

Galliford Try confirms 350 construction job cuts

Slimmed-down division to focus on building,water and highways
15 hours ago

Kier wins £20m Sheffield Park Hill student scheme

Flats at iconic estate will be converted into 356 student homes
1 hour ago

Site inductions to contain modern slavery warnings

How to spot labour exploitation now explained alongside traditional health and safety briefing
5 hours ago

Dawnus went down owing supply chain more than £40m

Subcontractors left in the lurch again following latest collapse
14 hours ago

Plastic road built on new housing development

Springfield Properties recycles waste plastic to help build new road
10 hours ago

Interserve benched on £1bn Welsh framework

SEWSCAP 3 deal: Details of latest winners
1 day ago

BAM Nuttall profit hits 10-year high

Operating margin back to 3% as profit tops £26m
1 day ago

Diversification shields Keltbray from demolition slowdown

Contractor looking at new markets as core commercial workloads fall
15 hours ago

Robertson lures property boss from Henry Boot

Nick Harris joins from one of contractor's biggest clients
1 day ago

Esh gears up for £36m Sunderland road job

Esh mobilises to start phase 3 of city strategic corridor
23 hours ago

London office work shifts towards major refurb projects

London crane survey shows little sign of Brexit blues
2 days ago

US consultant Tetra Tech to buy WYG for £43m

WYG board backs 55p a share offer at big premium to 16p share price
2 days ago

Boost your online presence – join the Enquirer Directory

New site for suppliers and buyers showcases products, services and latest stories
1 year ago

Prater soars past £100m revenue

Envelope specialist optimistic 2019 will see another year of growth
2 days ago

Construction to start on new Farringdon scheme this year

Helical and AshbyCapital acquire Charterhouse Place
2 days ago

VolkerFitzpatrick wins £27m rail station upgrade

Two stations to be upgraded in Cambridge and King’s Lynn enhancements
2 days ago

Joiner hit in face by falling steel beam

House builder fined £60,000 for lack of site supervision
2 days ago

Major contractors going cool on road maintenance market

Highways England taking more work in-house and looking to work direct with supply chain
5 days ago

Infrastructure project final costs average 80% above bid prices

Success measures for projects should shift from an over-focus on costs towards whole-life benefit
5 days ago

Newcastle firm targets £50bn London rooftop homes sector

High Street Group buys London rooftop penthouse firm
5 days ago

London Bridge 39-storey student tower approved

Student accommodation projects return to the Capital
5 days ago

Kier clinches £22m Paisley town hall revamp

Main construction to start early next year
5 days ago

Consultation opens on £1bn trans-Pennine A66 dualling

Plan to dual eight stretches of highway from Penrith and Scotch Corner
5 days ago

Kier project and commercial teams at loggerheads

Insiders reveal tension between teams on major projects
6 days ago

Lords call for HS2 rethink to secure northern upgrades

Warning that HS2 costs are out of control
6 days ago

Margins rising as nmcn enjoys strong start to the year

Water business surging ahead as new housing division expands
6 days ago

Durkan names new CEO as revenue rises to £165m

Ronan Murphy promoted and plans to double revenue in five years
6 days ago

Wates submits first phase of £1bn London housing plan

Havering Council and Wates Residential submit plans for Napier and New Plymouth House site
6 days ago

Affordable and build to rent homes lift Countryside

House builder's modular timber panel factory in Warrington now fully operational
6 days ago

Partner wanted for £800m Salford Crescent plan

Preferred bidder to be named before the end of this year
7 days ago

Contractor services