Am Best has revealed it is continuing to give Lloyd's a negative outlook amid rumours that Equitas could face insolvency.

The ratings agency initially said it might review the 300-year-old market's rating in April 2000, following concerns over deteriorating earnings, apparent difficulty in accurate forecasting of results and its ability to continue to leverage underwriting to attract new capital.

The agency now says these concerns have been resolved and it has reaffirmed Lloyd's A (excellent) rating. But it is maintaining the negative outlook ahead of Friday's results from Equitas, the company which manages Lloyd's asbestos and pollution claims.

Earlier this month, the United Names Organisation (UNO) warned Equitas it would need to strengthen its reserves by £5.69bn to cover a rise in US claims. The caution followed a report by AM Best that said the US insurance industry would be hit by £46bn worth of asbestos claims, two-thirds higher than its 1997 estimate of £28.4bn.

Senior analyst at AM Best, Nick Ferrier, said: “If current trends in the business continue over the next 12 to 18 months, then we are likely to look seriously at lowering the rating. The reasons for the previous outlook are now resolved but we are concerned there will be a negative impact from Equitas.”