Standard & Poor's has said the Lloyd's market has a strong competitive position but it warned that it is still exposed to some weaknesses.
S&P's said that Lloyd's, which is rated'A' and has a stable outlook, has a strong operating performance, strong capital adequacy and long-term capital support and flexibility.
The rating agency said in a report that although some Lloyd's companies has set up operations in Bermuda in recent months, most companies in the market were not in a position to "operate meaningfully" outside of the market in the short to medium term.
The report also said that the ability of many Lloyd's-based companies to raise new capital in the wake of the series of hurricanes last year also demonstrated the market's financial flexibility.
S&P's said it expected Lloyd's to post a combined ratio of below 95% for 2006 and 2007 and that the improved underwriting conditions for insurers and reinsurers in certain business lines, prompted by the hurricanes last year, were expected to benefit Lloyd's.
S&P said that exposure to Equitas, the run-off reinsurer had the potential for a "negative impact on Lloyd's by undermining confidence in the market among, in particular, clients, brokers and capital providers".
In addition, operating deficiencies and legacy administrative processes also had a negative effect on Lloyd's rating, among other factors, S&P added.
