Lloyd's of London will continue to make losses for the year 2000 account and 60% of trading syndicates will make a loss in 1999, according to Moody's.
The rating agency has revised its earlier forecast downwards to show that 1997 is becoming increasingly marginal and that losses in 1998 and 1999 will worsen.
Although market conditions are expected to improve, a loss is nevertheless forecast for 2000, which is overshadowed by the threat of potential millennium bug claims.
Each of the five main sectors (marine, composite, non-marine, motor and aviation) are forecast to make a loss for 1998, 1999, and 2000, with marine forecast to be the worst hit of all.
"Our current view is that market conditions for 2000 will only be a small improvement on those in 1999," said Mark
Hewlett, managing director of Moody's European property and casualty and reinsurance division.
"This, coupled with the extent of losses forecast for 1998 and 1999, does not currently suggest to us that 2000 will be anything but loss-making.
"It is notable that losses are forecast for each of the main Lloyd's sectors for 1998, 1999 and 2000 with the motor sector now forecast to produce six consecutive loss years, 1995–2000.
"We currently expect 60% of 1999 trading syndicates to make a loss."
Moody's has placed loss warnings on 61% and 60% of syndicates underwriting in 1998 and 1999 respectively, the majority of these forecasts to produce losses in excess of -5%.
The aviation sector is forecast to produce four consecutive loss years from 1997 to 2000.