How Not to Make a Shilling in Insurance

"A lot of other people," he points out, "are totally ruined."
Although the state of Arizona has dropped its attempt to punish Lloyd's, members such as de Trenck say they are pleased with the state's efforts.

"I thought they did an excellent job," he says. "Dee Harris did an absolute triple-A job."

And Jeff Peterson of the American Names Association says that despite Arizona's capitulation, its effort will not have gone to waste.

If Lloyd's does come after de Trenck and the other Names who refuse to accept the settlement, Peterson explains, the work done by the Arizona Corporation Commission's securities investigators will prove an invaluable resource to attorneys fighting defensively for Arizona Names.

Peterson isn't surprised that Arizona Names, both those who have accepted the settlement and those who haven't, admire the work done by the state.

"I'm glad to hear it, because they did an amazing amount of work and put their necks on the line for the Names. And in hindsight, I can say that this was not a winnable battle. I mean, we're not fighting a Merrill Lynch here. This is really a business with the backing of its government," Peterson tells New Times from his San Diego office.

"If this company was Lloyd's of Phoenix, the directors and officers would be in jail and we would have had our money refunded."

Peterson and many Names are still fighting to enter evidence about Lloyd's fraud in an American court. Currently, they await a decision from the Ninth U.S. Circuit Court of Appeals, which is considering whether to overturn a lower court ruling that the Names had to bring their complaints to British courts. If the American federal court finally allows the Names to argue that Lloyd's broke American securities laws, Peterson says, then Lloyd's will be in for the fight of its life. "This isn't over," he predicts.

Names who have accepted Lloyd's settlement agreement hope that the market's attempts to contain the runaway losses will hold up. They're nervous, they say, when Lloyd's makes assurances that their nightmare is over.

One Name says he's been duped one too many times already. He says he'll never forget his initiation ritual in that stuffy London meeting room. "One of the guys in the wigs says to me: 'I'm sure you understand that there's unlimited liability.' And the guy at the end of the table winks at me. They had this thing all staged.