Fitch Ratings has reaffirmed Lloyd's financial strength (IFS) of...
Fitch Ratings has reaffirmed the financial strength (IFS) of ‘A' for Lloyd's following updated estimates of the market's losses from Hurricane Katrina.
Fitch stated that the outlook for the IFS and long-term ratings remained “stable”. At the same time, Fitch has affirmed ratings for the Society of Lloyd's and its subordinated debt issue.
The rating action follows the publication of updated Hurricane Katrina loss estimates for Lloyd's and initial loss estimates for hurricanes Rita and Wilma.
The net loss estimate for Hurricane Katrina was increased to £1.9bn from the £1.4bn published in September 2005. Initial net loss estimates for hurricanes Rita and Wilma are £535m and £483m respectively.
As a result of these losses, Lloyd's is not expected to record a bottom-line profit for 2005.
Fitch said that the hurricane loss estimates published by Lloyd's were within the scope of its current ratings, but that a material increase in those estimates or further major catastrophe losses could have negative rating implications.
Fitch added that the ratings reflected the capital strength and strong franchise of Lloyd's.
The ratings agency said these were partially offset by the risk associated with a substantial increase in the volume of reinsurance recoverables and continued exposure to Equitas, the run-off vehicle into which Lloyd's pre-1993 underwriting liabilities have been reinsured.
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