S&P reaffirm A+ rating with stable outlook

Standard and Poor’s has reaffirmed its A+ rating with stable outlook of the Lloyd’s insurance market today, emphasising strong operating performance, capitalisation and financial flexibility.

The report also lays considerable emphasis on Lloyd’s global competitiveness.

Lloyd’s competitive strength, the report indicates, is underpinned by a range of factors including risk syndication, brand strength, policyholder loyalty, and London’s enduring position as an insurance and reinsurance centre.

Lloyd’s investment strategy, liquidity, solvency and capital adequacy are all positively detailed in the report.

It also mentions ongoing improvements to business processes, rising numbers of new entrants to the market, and the recent completion of the Equitas deal as contributors to competitiveness.

“In our view, the impressive level of resilience that Lloyd’s has demonstrated to the events of the past 12 months further reinforces its attractiveness as an operating platform,” the report states.

Confidence in the market

This view is in sync with Lloyd’s own confidence in the market, especially in the face of a rapidly changing competitive environment:

“S&P’s assessment is welcomed by Lloyd’s,” says Luke Savage, Lloyd’s Director of Finance, Risk Management and Operations. “What’s even more heartening is the rationale behind the assessment. It vindicates the strategy we adopted and have been following over the past few years.

"We’ve worked hard to re-establish the Lloyd’s brand and reputation as a reliable, dynamic platform. And we did that during a time of unprecedented financial activity, where our cautious approach, relying on steady rather than stellar gains, went against the grain.”


While the report describes Lloyd’s as 'an attractive platform for an increasingly diverse range of capital providers,' and that its 2008 operating performance 'represents a very strong level of performance in an extremely challenging operating environment,' it doesn’t shy away from realities.

Operating performance is expected to remain strong but, the report says, a return to the 2006-7 peak is unlikely. It also points to a potential weakness due to the market’s ‘relatively high reinsurance reliance’.

Challenging operating environment

However, the report places confidence in various teams both within the Lloyd’s Corporation and managing agents, highlighting that the successful navigation through the last soft market has given underwriters 'the skills to manage underwriting cycles' that will leave them 'well positioned to cope with the demands of today’s challenging operating environment.'