Moody's has changed the outlook on the B Average performance rating of syndicate 340 - St Paul Syndicate Management - to negative.
Syndicate 340 is 92% backed by the St Paul Companies, and is looking to acquire 100% of the syndicate's capacity for 2003.
Managing director Mark Hewlett said: "St Paul have confirmed their commitment to and are looking to expand the direct aviation business written at Lloyd's via syndicate 340.
"Moody's, however, whilst recognising the significant improvement in aviation market conditions and that the syndicate's volatility will significantly reduce going forward, notes that the syndicate only began effectively writing airline business last year."
The syndicate looks set to concentrate on direct aviation business and cease writing reinsurance business.
Hewlett added: "Despite St Paul's confirmation of their commitment to direct aviation business for the immediate future, Moody's has changed the outlook on syndicate 340's performance rating to negative.
"This reflects current concerns over the syndicate's ability to sustain a meaningful book of airline business over the longer-term."
