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BRITAIN/ Lloyd's of London makes art work for its members

With help from Lloyd's of London, works of art have come of age as investments. For the first time in its long history, the insurance exchange is prepared to accept the value of works of art into the computation of a member's means.

For almost 300 years, Lloyd's has sold insurance that is backed by ``members'' -- wealthy individuals who assume liability for insurance policies, and who reap profits when premiums outpace claims. The members, known as ``names,'' are required to prove sufficient wealth to qualify. This entitles them to take part in Lloyd's underwriting syndicates by paying a substantial deposit and pledging further assets.

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Until now, these assets as a rule have been accepted only in the form of real estate, stocks, and bank guarantees. Works of art have never before been accepted, either directly or indirectly.

But a new scheme -- devised by Sotheby's and Hogg Robinson, a leading Lloyd's broker, in conjunction with the Sun Alliance Insurance Company -- allows a proportion of the value of a single work of art or a collection (not normally more than one third) to be included with assets pledged to Lloyd's.

This does not mean that pictures, furniture, jewels, and silver will now be stacked up at Lloyd's, or anywhere else. Owners will be able to retain their possessions exactly as before while the Sun Alliance guarantees to Lloyd's through Barclays Bank that the works exist and are adequately insured. The auction house Sotheby's will be responsible for providing the valuation and any other advice the name might require, and the whole system is organized by Hogg Robinson. Putting works of art to work

Members of Lloyd's who own significant works of art are likely to be pleased with the new arrangement. Assets pledged to Lloyd's take not only the profits (and the losses) from underwriting, but also their normal income -- such as rents from real estate and interest on bank deposits, as well as the capital appreciation. But valuable works of art are notoriously expensive to insure, and yield only capital appreciation. Now, for the first time, they can earn their keep.

It is significant that Sotheby's won the recognition for works of art as capital assets. For 30 years the have pioneered the change of attitude towards works of art from being; once regarded merely as the ornaments to a civilized life, they are now being bought with at least half an eye on their sound investment potential. Not everyone at first appreciated the unseemly intrusion of commercialism into the gentlemanly world of the connoisseur. But thanks largely to the outstanding chairmanship of the late

Peter Wilson, Southeby's has led a market hype that continues unabaited.

The results of the 1984-85 season bear this out with a very impressive crop of record prices from the leading auction houses. Christies sold Mantegna's ``Adoration of the Magi'' for 8.1 million and a blue diamond for 3.5 million, a record for a single stone. Sotheby's achieved $9.9 million (8.14 million) for Van Gogh's ``Paysage en Soleil Levant'' from the Florence J. Gould collection in New York, 825,000 for a silver service by Paul de Lamerie, 396,000 for ``La Cathedrale'' Stradivari violin, down

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to 14,300 for a photograph by Julia Margaret Cameron, c. 1867, and 4,620 for a 19th Century bronze corkscrew and even a world record 2,090 for a Teddy Bear.

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