Ratings agency Fitch has announced its reaffirmation of Lloyd’s ‘A+’ rating, with simultaneous announcements affirming Society of Lloyd’s ‘A’ and Lloyd’s Reinsurance Company (China) A+ evaluations.
Fitch has also affirmed Lloyd’s subordinated debt rating at A- and categorised the Lloyd’s market as the second largest reinsurer by net earned premium.
The news comes a week after A.M. Best reaffirmed its assessments of Lloyd’s.
These affirmations reflect the consensus in business and analyst circles about the stable outlook for Lloyd’s, informed both by sound business results and steady performance of investments during a time of dramatic economic deterioration.
Ratings results
While acknowledging external factors, such as global economic instability, 2008 as the third worst year of catastrophe losses, and exchange rate fluctuations, Fitch’s affirmation reflects:
- Resilient performance during 2008, noting positive investment returns
- Underwriting performance in line with expectations
- Capital strength maintained and supportive of rating
- Recent completion of the Equitas Phase 2 deal
- Potential upward trend in premium rates
- Strong global franchise
However, Fitch’s stable outlook assessment was tempered by noting some limitations, including a potential reversal in exchange rate gains during 2009, near term decline in underwriting performance due to elimination of current benefits from reserve releases, and a reasonable expectation of reduced earnings levels below that of the record performance years of 2006 and 2007.
“We’re obviously very satisfied with Fitch’s assessments of the strength and stability of Lloyd’s,” says Luke Savage. “It’s gratifying to see that Lloyd’s conservative investment strategy has been regarded as a positive performance indicator and that underwriting discipline is seen as an essential factor in analysts’ considerations.”
