before it is too late to join the 20th century, the 10th International Reinsurance Congress was told yesterday.

Marty Dolan, executive director of Lehman Brothers International in London, predicted that more sweeping changes for the insurance institution were needed if it was to survive.

The three-day reinsurance conference, sponsored by Coopers & Lybrand, in association with Hawksmere Plc at the Princess Hotel, ended yesterday.

Having last year foreseen the capital flight from Bermuda and US companies to Lloyd's, the Lehman Brothers unit is this year predicting higher solvency demands for Names, forcing their quick departure from Lloyd's and a corporate recapitalisation of that market.

He added: "The people of Lloyd's are obviously aware of this, having completed phase one of their restructuring. They are acutely aware of the need to keep the momentum going.'' He said Lloyd's will begin, for the first time, to change its regulations to make them more closely parallel those of the Department of Trade & Industry (DTI), which regulates London's company market. "I don't think we anticipate that the DTI will take over the regulation of Lloyd's, but it really is peculiar that there are two regulators in one jurisdiction,'' he said. "At the very least, they ought to be applying the same solvency rules.

"We would anticipate something like 30 trading entities, down from 170 today, with $200 million in capital behind each one; larger lines for the leaders, at 20 to 50 percent, instead of ten percent; and many more leaders and fewer followers.

"Very few spread vehicles will survive as investment vehicles and there has already been a lot of consolidation. There will be many dedicated vehicles, most of which will be supported by insurance companies, with the unlimited backing of their parent firms.

"We also think there will be in the future a lot of emphasis on restructuring the broker distribution. Lloyd's has spent the last couple of years rebuilding its capital structure, but the front end has really been as inefficient as the back end has been.'' An American living in London, Mr. Dolan rankled more than one British conference participant by severely criticising the "new and improved'' Lloyd's.

He remarked how other major European players like Munich Re and Swiss Re were considering new markets and making billion dollar acquisitions, while Lloyd's was "really having an intramural swapping around of capacity, which doesn't promote its interests very well''.

He said that with Lloyd's managing agencies you have 500 million businesses, each managing six to 12 syndicates, but each with their own staff and cost structure, and with overlapping risk acceptance and overlapping reinsurance programmes.

"It's difficult to see that lasting in the long term,'' he said.

He lamented Lloyd's three year accounting, while the rest of the world works on one year accounting. He saw it only causing delays in the recognition of losses and delays in the recognition of profits.

Mr. Dolan continued: "It's frightening to know that Lloyd's lost most of its money from 1989 through 1992 and only a month ago in 1996 did they finish their reconstruction and renewal programme. That is a long time lag between recognition of a problem and dealing with it.

"Another problem is that Lloyd's basically has unsophisticated capital providers. We find that most of the Names are ill-informed about the insurance and reinsurance business. They tend to be driven by tax and leverage and its clear that they are likely to exit in due course, whether actuarially or because their solvency is going to be asked to be increased.'' He said standard solvency for the industry is about 50 percent of premium capacity, with most companies writing at about 50 percent net to their premium capacity.

He complained that by comparison Lloyd's Names had solvency of between 20 and 30 percent, and seven to 10 percent paid up capital.

Mr. Dolan stated: "The quicker the market can become corporate -- the quicker it can be backed by professional capital -- the quicker it can start to regain the market share it has lost in the last four or five years.''