A SMALL group of disgruntled investors is threatening to scupper a Pounds 3.1 billion sterling compensation package for investors who suffered heavy losses in the Lloyd's of London insurance market. Irish investors have been advised to accept the offer.

Up to 3,000 private investors, or Names, yesterday appeared set to block the settlement deal, threatening to begin legal action on the grounds that they would face financial ruin if it went ahead.

The investors are members of the Paying Names Action Group (PNAG) who, having already paid large sums of money to Lloyd's to cover their liabilities, still face bills of more than Pounds 500,000 under the terms of the settlement package.

Up to yesterday, indications were that more than 80 per cent of the 43,000 Names would vote to accept the one-off settlement deal. Most of the 413 Irish Names, many of whom were investors in the Gooda Walker syndicate, are understood to be anxious to accept the settlement.

The chairman of the syndicate's action group, Mr Michael Deeny, has advised its 3,093 members, who have battled with Lloyd's for more than five years for more compensation, to accept the offer.

In a letter to syndicate members, Mr Deeny said the offer was up to three times better than any monies they could have recovered through a court action.

The settlement forms part of a restructuring of Lloyd's that will put an end to pending legal actions and effectively ring fences the insurance market from all losses arising from insurance policies signed before 1992.

The new structure, under which a reinsurance entity trading as Equitas will take charge of all losses up to that date, is expected to be approved by members at the annual general meeting of Lloyd's in London on Monday.

Under the settlement package, Gooda Walker syndicate investors, such as Lord Mount Charles, will recoup close to 38 per cent of investment losses incurred between 1988 and 1992.

Other syndicates have faired less well under the settlement, however, with some members offered substantially less compensation, while some 12,000 Names stand to receive no compensation.

Lloyd's names in Ireland include Lord Killanin; the former Green Party TD, Mr Roger Garland and the boxing promoter, Mr Barney Eastwood.

The surprise move by the PNAG group yesterday has raised concerns that the deal, which is crucial to the survival of Lloyd's, may not go through.

Announcing its decision, PNAG chairman, Mr Tony Welford, said many of the 3,000 Names have been forced to borrow large sums to meet the demands by Lloyd's and could face losing all of their assets if the package was accepted next month.

Today, the Lloyd's of London insurance market is expected to announce a Pounds 1 billion pre-tax profit for 1993 - ending six lean years when losses totalling Pounds 8 billion financially crippled thousands of investors. It last made reported profits in 1987, when earnings amounted to Pounds 510 million.

Lloyd's publishes its results three years in arrears but indications are that 1994 and 1995 are also expected to show healthy profits.