Lloyd's likely to feel hit in U.K.'s record robbery; may be a test for self-insurance.

The multimillion-pound armed robbery of a storage depot near London is likely to be felt within Lloyd's, which has a worldwide reputation for writing insurance for this kind of risk.The robbery also may offer the cash-in-transit industry a glimpse of the effectiveness of its self-insurance efforts.

The Feb. 22 robbery occurred at a storage facility run by Securitas Cash Management Ltd. in Tonbridge, south of the British capital. The robbers disguised themselves as police officers. Securitas has said that 53 million [pounds sterling] (approximately $91.5 million) was taken in what was the largest cash robbery in British history.

Police have charged several people in connection with the crime and recovered a large amount of money.

Lloyd's Syndicate 1414, run by underwriter Ascot, is the lead insurer for Securitas' primary cover. David Edward, senior underwriter and director at Ascot, explained that this cover would take effect after Securitas had used its own captive-based insurance. "We're the first commercial insurance that they buy," he said.

"The cover is basically giving them physical loss of any of the cash or other valuables that they have in their possession either whilst in their premises or in transit," Edward said.

Ascot, a unit of American International Group Inc., wrote the business with fellow insurers that include Zurich, Hannover and Great American. "We're the only Lloyd's syndicate on that primary placement," said Edward, who was reluctant to discuss the loss of Ascot's exposure. He spoke during an interview at Ascot's office.

Securitas buys "very, very big limits," he said, noting that the excess insurance was led by Lloyd's underwriter Millennium.

In Edward's view, premiums are likely to increase as a result of the robbery. "This is not the only large loss that [this sector has] had over the last two years," he said. "This is the latest in a string of large losses."

Robert Read, fine arts and specie underwriter for Lloyd's insurer Hiscox plc in London, said rates would move upward and operators would face pressure to assume more risk.

There are a handful of global organizations in the cash-in-transit business, Edward said. "They all buy hundreds of millions of dollars of cover," he said. "And they pay millions of dollars of premiums."

These companies also use captives, which, he said, have been part of the equation for around the past five years.

Hiscox has no involvement in the Securitas claim. Read, who said he looks at this business but doesn't write a lot of it, observed that it isn't notably profitable. "It's a very tricky class," he said.

With the inevitability of claims, Read said, underwriters interested in this line should pay close attention to terms and conditions, particularly the amount of risk they take on.

Policies normally would cover physical loss or damage. A large company such as Securitas usually would insure money while it is in transit and while it is stored in its vault.

Edward regards Securitas as a well-run company, sophisticated in handling the security threats it faces. He said the policy is an annual one that was renewed as of Jan. 1. "They are a long-standing client," Edward said of Securitas. "We've been involved for the last three years with Securitas, and we enjoy a good relationship."

Securitas' role would be as a custodian for its own clients, in this case the Bank of England. Securitas reacted swiftly to the crime, transferring 25 million [pounds sterling] to the Bank of England to cover the loss.