AM Best, the insurance rating agency, has downgraded the Lloyd's market rating to A- (Excellent) from A (Excellent) and placed the rating “under review with developing implications".
AM Best said it based the downgrade on the view that the cost of the terrorist attacks in the US could have a “substantive impact upon the market's financial strength".
The agency said it had discussed the results of its recent second survey of syndicate exposures with Lloyd's and it appeared the loss to the market would be slightly lower than Lloyd's realistic disaster scenario (RDS).
This involved the systemic risk modelling for the potential impact of a California earthquake.
The agency said: “Lloyd's recognises this is not necessarily an ideal proxy for the current event. However, Lloyd's believes the scale of loss this represents, on both a gross and net basis, and the ongoing information it has received about the 'spread' of losses across the members of the market, suggest that the effect on the market will be 'manageable' and that the market will be able to trade through this event."
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