Lloyd’s Outlook Stable

A.M. Best Co. affirmed the financial strength rating of “A-” of the Lloyd’s market with a stable outlook. Lloyd’s has a financial size category of XV.

Lloyd’s excellent business profile, excellent capitalization and high standards of regulation influence the affirmation. Offsetting factors are the market’s weak financial performance; uncertainty caused by the sheer magnitude of losses Lloyd’s faces certain issues arising from its Chairman’s Strategy Group proposals, and long-term uncertainty over the ultimate adequacy of Equitas’ reserves.

Lloyd’s benefits from its high-profile global brand and network of licenses and representative offices and has a leadership profile in many specialist classes of business and a strong relationship with its main market, the U.S. Current market conditions are expected to be particularly advantageous for Lloyd’s, because it has a strong profile in many of the lines of business that now are experiencing the most marked improvements in premium rates.

Lloyd’s maintains an excellent level of capital on a risk-adjusted basis. Funds supporting underwriting at year-end 2001 increased 17.5 percent on year-end 2000 to 21.8 billion pounds ($31.8 billion). The market has taken steps to rebuild the Central Fund in the wake of the WTC loss by increasing the premium levy from 1.1 percent to 2 percent and paying the funds generated into the Central Fund in 2002 and 2003; 111 million pounds ($162 million) was paid in the first two quarters of 2002. Lloyd’s risk-based capital model remains a sophisticated method for allocating capital in the market and at least meets best-practice standards in the insurance industry.

Topics Trends Excess Surplus Lloyd's