S&P and Fitch have affirmed Lloyd's ‘A’ rating and stable outlook. Luke Savage, Lloyd's Director of Finance and Risk Management, greeted the affirmation. He said: "This is a very welcome vote of confidence in the Lloyd's market, after the most severe hurricane season on record, and at a time when many other insurers have been downgraded.”

The announcements were made a few weeks after Lloyd’s updated the estimated financial impact on the market of Hurricanes Katrina, Rita and Wilma, based on the results of a Major Loss Return from each managing agent and capacity figures for next year.

The market’s net loss from Katrina is now estimated at £1.9bn ($3.42bn). This compares with the provisional estimate of £1.4bn ($2.55bn) given by Lloyd’s on 14 September which was based on the limited information at the time. The net loss from Rita is estimated at £535m ($947m) and from Wilma at £483m ($855m).

Many of the syndicates which have exposures to the US hurricane season have amended their 2006 business plans, increasing capacity to take advantage of the higher rating levels expected in various classes of business.

In total, some 94% of the reinsurance recoverable externally by the market’s participants is rated in the ‘A’ range or above by S&P and A.M. Best. Luke Savage says: “Lloyd’s is financially robust. All businesses in the market expect to be able to meet their liabilities from the hurricanes. Any impact on the Central Fund will be immaterial. This is clear evidence of the progress Lloyd’s has made over recent years.”

Lloyd’s expects the market to have the capacity to write approximately £14.7bn of business in 2006, an increase of 7% on last year. This contrasts with the position before the hurricanes, with rates softening, when it was expected that Lloyd’s market capacity would reduce by around 7%.

Syndicates that have been unaffected by the US hurricane losses have continued to exercise discipline, with some reducing underwriting capacity for the year ahead.