Lloyd’s credit ratings outlook upgraded to positive

Rating agency cites actions taken over recent years

Lloyd’s credit ratings outlook upgraded to positive

Business Resilience

By Terry Gangcuangco

AM Best has upgraded the outlooks for the credit ratings of Lloyd’s and its rated subsidiaries, as well as for the credit ratings of the Society of Lloyd’s.

In a release, the rating agency said: “AM Best has revised the outlooks to positive from stable and affirmed the financial strength rating of A (Excellent) and the long-term issuer credit ratings (ICR) of “a+” (Excellent) of Lloyd’s, Lloyd’s Insurance Company (China) Limited, and Lloyd’s Insurance Company S.A. (Lloyd’s Europe).

“Concurrently, AM Best has revised the outlooks to positive from stable and affirmed the long-term ICR of “a” (Excellent) of Society of Lloyd’s and the long-term issue credit ratings of “a-” (Excellent) on the £306 million 4.750% subordinated loan notes maturing October 30, 2024, as well as on the £300 million 4.875% subordinated notes maturing February 7, 2047.”

According to AM Best, the credit ratings reflect the strong operating performance, favourable business profile, and appropriate enterprise risk management at Lloyd’s, as well as the balance sheet strength of the insurance marketplace.

“The positive outlooks reflect, in part, actions taken over a number of years to improve the resilience of Lloyd’s balance sheet,” AM Best said. “This includes the introduction of the Lloyd’s Central Fund insurance, increase in the callable layer, and limits put in place to reduce excessive risk-taking by individual syndicates.

“Furthermore, Lloyd’s has continued to demonstrate the successful application of its ‘coming into line’ process, following a series of challenging years, due to the COVID-19 pandemic, elevated catastrophe activity, and the conflict in Ukraine, which has shown Lloyd’s ability to consistently re-capitalise and grow capital year-over-year.

AM Best added that it expects Lloyd’s to continue delivering a strong operating performance over the underwriting cycle while successfully executing its modernisation strategy.

In a statement sent to Insurance Business following the upgrade, Lloyd’s chief financial officer Burkhard Keese said: “I am pleased to see AM Best recognise the improvement in Lloyd’s underwriting performance and the quality, strength, and stability of our balance sheet.”

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