Lloyd's has held on to its A(excellent) rating from AM Best but the rating agency has attached a negative outlook following the insurance market's deteriorating earnings during the past three years.

The rating applies to Lloyd's 122 active underwriting syndicates but not to Equitas, the reconstruction and renewal vehicle for pre-1993 losses.

AM Best said its affirmation of the A(excellent) rating is based on Lloyd's excellent capital strength, its lead market position, high brand image and good regulatory oversight.

But it attached a negative outlook to its rating, based it said, on the sharp deterioration in the market's earnings in the past three years and concern over its ability to accurately forecast its results.

AM Best expects 1998, 1999 years of account to continue to deteriorate from losses of £725m to £1bn for both years, and result in further restructuring of the market through mergers and acquisitions of agents and syndicates.