A.M. Best reaffirms Lloyd’s Rating

Luke Savage, Lloyd’s Finance Director, said: “We’re pleased that A.M. Best has reaffirmed our ratings and focused on our strong performance. The market will be facing some challenges in the next few years; however, it is good to see that A.M. Best recognise Lloyd’s strong operating model and business profile."

A.M. Best’s assessment
 
The rating agency’s reasons for reaffirming Lloyd’s ratings are robust, citing the following points:

Strong capitalisation
A.M. Best expects Lloyd’s to maintain its strong capitalisation despite anticipated deterioration in industry performance during the current more challenging phase in the insurance cycle.

Good financial flexibility
Financial flexibility is enhanced by a diverse capital structure and Lloyd’s continues to draw investment from both corporate and non-corporate capital.

Good prospective performance
A.M. Best highlighted that performance in 2010 is likely to be weaker than the excellent level achieved in 2009, particularly following the Chilean earthquake and Deepwater Horizon oil rig catastrophes. Despite this, the overall combined ratio of the market is expected to deteriorate from 86% in 2009 to between 95% and 100%.

Excellent business profile
Lloyd’s excellent position in the global insurance and reinsurance markets as a specialist provider of property and casualty business was noted by A.M Best. Its competitive strength derives from its reputation for underwriting expertise, innovation and flexibility, while its network of licences provides access to a wide international client base.

Strong operating model
The broker subscription model, which allows large and complex risks to be shared between market participants, supported the market after the financial turmoil of 2008 highlighted the benefit for insurance buyers of spreading risk among different counterparties.

This is the 6th year in succession that the market has maintained it's A rating. Read A.M. Best's press release.