Insurance company arms for lawsuits

Insurance market Lloyd's is preparing to be hit hard by a spate of lawsuits from aggrieved investors who lost money when the bottom fell out of the technology sector.

Lloyd's may now have to pay the price for providing insurance for company directors, which safeguarded them against personal losses resulting from legal action in the event of a share slump.

With shareholders in companies such as Cisco, Lucent and Nortel considering legal action, and an increasingly litigious society in the US, many directors will now be digging out their policies and Lloyd's will be fearing the worst.

The Times reports Lloyd's underwriter, SBV Holdings, has issued a profits warning this week. Its share price halved almost overnight amid increasing fears surrounding directors' liability policies and the full extent of a shareholders' backlash.