Supercharged economies plummeted, stock prices fell, and currencies collapsed. The beginning of the end of Asia's economic dream started in Thailand on June 25, 1997. In the coming months foreign investors, lured in the 1980s by the promise of high returns, began to realise that the miracle had been halted, and that preliminary measures imposed by the International Monetary Fund had left the region with mass bankruptcy, unemployment, and recession.

Looking back to 1997, it is easy to trace the start of the crash, and its subsequent spread through Asia. The Thai economy was the trigger. After only five days as Thai finance minister, Thanong Bidaya uncovered the true state of his country's economy. On a sweltering June afternoon, Mr Thanong, visiting the Bank of Thailand, discovered the country's reported foreign reserves of more than $30 billion were actually only $1.14 billion. His only possible course of action was to float the baht and shut down struggling financial institutions, acts which plunged Thailand, and consequently much of Asia, into an economic downturn.

Many Western businesses chose to flee, but Lloyd's of London saw the crisis as a temporary blip. Then, as now, Lloyd's saw continuing extension into Asia as essential to its global development. The process is part of a wider global strategy which seeks to enhance the Lloyd's franchise, including the market's international licenses, security ratings, brand, and reputation. Lloyd's views further development of its relationship with Asia as attractive for a number of reasons, including the prospects of liberalisation of Asian markets, greater consumer demand, and the increasing sophistication of Asia's diverse insurance economies. Additionally, recovery after the crash will bring beneficial reforms and tighter regulation.

This optimistic perspective can in part be ascribed to the degree of Lloyd's involvement in the region. In 1997 Lloyd's Japan Inc (LJI) was opened. It is a separate entity funded by participating syndicates to build long-term, high value Japanese business. Also that year Lloyd's launched a representative office in Hong Kong; another was opened in Australia in 1998. In 1999 Lloyd's was granted a reinsurance license to write business in Labuan, and this year a new vehicle, Lloyd's Asia, is being established in Singapore to allow underwriting teams to deal direct with local insurance buyers. A second Chinese office, in Beijing, will also be opened this year.

Lloyd's strategy is to examine new models suited to local requirements, with representative offices complementing each other. Each proposition seeks to develop business and the market's presence, as well as to serve customers, and each office has a unique strategy to achieve these objectives. Traditionally Lloyd's links with Asia were provided by underwriting support of local brokers through reinsurance, with the majority of business in sectors such as marine, aviation and energy. However, Lloyd's Asia and Lloyd's Japan reveal the market establishing a more direct presence, allowing Lloyd's increasingly to offer products in specialist fields such as financial risks, political risks, internet-based liability, and technology liability.

In Singapore, which in 1999 produced a net premium income of £17 million for the market, Lloyd's has tried to preserve the freedom of approved brokers able to broke risks directly to London. At the same time Lloyd's has been working with the Monetary Authority of Singapore (MAS) to allow underwriters to establish a direct physical presence. Lloyd's and the MAS intend to see the creation of a new market, to be called Lloyd's Asia, within which Lloyd's managing agents can set up underwriting teams to act as extensions of their syndicates in London. In Japan, Lloyd's largest market in Asia delivering nearly one-third of its regional business in 1999, Lloyd's has seen steady progress against a challenging set of economic conditions. LJI began underwriting in April 1997.

Lloyd's has a presence in Hong Kong, New Zealand, and Australia through representative offices. In contrast, the relationship with China is one of cooperation on a broad scale, combined with a consultancy-type role. Earlier this year in Beijing, Lloyd's, the Chartered Insurance Institute (CII) and the China Insurance Regulatory Commission (CIRC) held a three-day seminar intended to provide local insurers with an insight into the way Lloyd's is regulated and operates.

Asia's importance to Lloyd's and to other foreign investors will undoubtedly increase with time. The on-going initiatives spearheaded by the Association of South East Asian Nations (ASEAN), which include a comprehensive development agenda to strengthen the region's infrastructure for sustainable economic growth, will have a positive impact on the growth of business in local and regional economies. Although recovery has been far from even in the region, most countries saw an economic upturn in 1999. Singapore, for example, has rebounded strongly, with GDP growth of 5.4%, and Malaysia and Thailand grew by 5.4% and 4.2%.

Lloyd's decision to stick with Asia seems to have paid off. In 1999 total net premium income from the region was nearly £450 million, up more than 10%. LJI is matching its premium income targets, Lloyd's Asia already has three managing agencies physically based in Singapore, and several agents have established service companies in Labuan.

Sarah Pelling is a Media Relations Executive for Lloyd's of London.