A PROPOSED #900m compensation offer to aggrieved Lloyd's of London

investors received a serious setback last night when a crucial vote was

defeated.

Members of the Gooda Walker syndicates, which alone lost more than

#900m, rejected the offer which Names -- the individuals who mainly fund

the market -- must decide whether to accept by February 14.

The vote was five to one against and the decision was described by

Lloyd's as ''regrettable''.

The compensation package offers up to half the losses suffered by

17,000 Names if they forfeit claims against future losses and drop legal

action alleging negligence. Members of other major syndicates have

recommended rejection of the offer.

A Lloyd's official said: ''It is regrettable because it is one of the

largest of the action groups in terms of payments due from the

settlement fund.'' Gooda is due for #220m of the fund.

''We provided them with certainty and money now in return for no

action against members and managing agents -- we put together what we

believed was the best offer.''

But Michael Deeny, chairman of the Gooda Walker action group, said

they were entitled to a higher offer and ''protection against liability

for future losses''.