AM Best Upgrades Credit Ratings of Lloyd’s, Its Rated Subsidiaries and Society of Lloyd’s
August 07 2024 - 10:00AM
Business Wire
AM Best has upgraded the Financial Strength Rating (FSR)
to A+ (Superior) from A (Excellent) and the Long-Term Issuer Credit
Ratings (Long-Term ICR) to “aa-” (Superior) from “a+” (Excellent)
of Lloyd’s (United Kingdom), Lloyd’s Insurance Company (China)
Limited (Lloyd’s China) (China), and Lloyd’s Insurance Company S.A.
(Lloyd’s Europe) (Belgium). Concurrently, AM Best has upgraded the
Long-Term ICR to “a+” (Excellent) from “a” (Excellent) of Society
of Lloyd’s (the Society) (United Kingdom) and the Long-Term Issue
Credit Ratings to “a” (Excellent) from “a-” (Excellent) on the GBP
306 million 4.750% subordinated loan notes maturing 30 October
2024, as well as on the GBP 300 million 4.875% subordinated notes
maturing 7 February 2047. The outlooks of these Credit Ratings
(ratings) have been revised to stable from positive. (See further
rating actions on various syndicates below.)
The ratings reflect Lloyd’s balance sheet strength, which AM
Best assesses as very strong, as well as its strong operating
performance, very favourable business profile and appropriate
enterprise risk management.
The upgrading of the ratings reflects the Lloyd’s market’s (the
market) excellent position in the global general insurance and
reinsurance markets as a leading writer of specialty
property/casualty risks, together with its strengthened balance
sheet fundamentals and proven risk management capabilities. The
growing size of the market demonstrates its ability to attract and
retain investors due to its unique business proposition that offers
a capital efficient structure and the ability to write business
globally.
Lloyd’s balance sheet strength is underpinned by risk-adjusted
capitalisation at the strongest level, as measured by Best’s
Capital Adequacy Ratio (BCAR). Capital adequacy is supported by a
robust risk-based approach to setting member-level capital and
Lloyd’s Central Fund, which is available to meet the policyholder
obligations of all Lloyd’s members. The protection afforded to
members through the Central Fund was enhanced in 2021, following
the purchase of Central Fund insurance by the Corporation of
Lloyd’s (the Corporation), which was renewed for another five years
in 2024. AM Best’s assessment of the balance sheet strength of
Lloyd’s considers the fungibility constraints of capital held at
the member level and the market’s good financial flexibility, which
is enhanced by the diversity of its capital providers.
The market’s exposure to catastrophe risk is an offsetting
factor. However, the requirement for members to replenish their
funds at Lloyd’s to meet their underwriting liabilities, as part of
the ‘Coming into Line’ process, together with the Corporation’s
enhanced oversight of accumulation risk, partly mitigates the
potential for volatility in risk-adjusted capitalisation due to
operating losses.
The operating performance assessment reflects AM Best’s
expectation that the market will produce strong underwriting
performance over the underwriting cycle and that capital will
continue to be attracted to Lloyd’s. Improved pricing conditions,
as well as the robust performance oversight by the Corporation,
materialised in measurable improvements in underwriting performance
over recent years. Nonetheless, the market’s expense ratio
continues to be higher than those of its peers. Actions are being
taken through the Future at Lloyd’s initiative to reduce the cost
of placing business at Lloyd’s, although any benefits will likely
take time to materialise.
The ratings of Lloyd’s China and Lloyd’s Europe reflect
reinsurance support from Lloyd’s in the form of quota share
contracts between Lloyd’s and the syndicates, which are active in
its Chinese and European platforms.
The ratings of the Society are notched from the ratings of
Lloyd’s, reflecting the unique relationship between the Society and
Lloyd’s, which means that the ability of the Society to meets its
obligations is inextricably linked to the ability of Lloyd’s to
meet its obligations.
The Lloyd’s market ratings are the “floor of security” of all
policies written at Lloyd’s across all Syndicates.
AM Best has also upgraded the FSR to A+ (Superior) from A
(Excellent) and the Long-Term ICR to “aa-” (Superior) from “a+”
(Excellent) for the following Lloyd’s syndicates. The outlooks of
these ratings have been revised to stable from positive.
—Lloyd’s Syndicate 2001, managed by Amlin Underwriting Ltd
—Lloyd’s Syndicate 2623, managed by Beazley Furlonge Limited
—Lloyd’s Syndicate 623, managed by Beazley Furlonge Limited
—Lloyd’s Syndicate 3623, managed by Beazley Furlonge Limited
—Lloyd’s Syndicate 3622, managed by Beazley Furlonge Limited
—Lloyd’s Syndicate 33, managed by Hiscox Syndicates Ltd —Lloyd’s
Syndicate 3000, managed by Markel Syndicate Management Limited
This press release relates to Credit Ratings that have been
published on AM Best’s website. For all rating information relating
to the release and pertinent disclosures, including details of the
office responsible for issuing each of the individual ratings
referenced in this release, please see AM Best’s Recent
Rating Activity web page. For additional information
regarding the use and limitations of Credit Rating opinions, please
view Guide to Best’s Credit Ratings. For information
on the proper use of Best’s Credit Ratings, Best’s Performance
Assessments, Best’s Preliminary Credit Assessments and AM Best
press releases, please view Guide to Proper Use of Best’s
Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and
data analytics provider specialising in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in London, Amsterdam,
Dubai, Hong Kong, Singapore and Mexico City. For more information,
visit www.ambest.com.
Copyright © 2024 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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Kanika Thukral Associate Director, Analytics
+44 20 7397 0327 kanika.thukral@ambest.com
Tim Prince Director, Analytics +44 20 7397
0320 timothy.prince@ambest.com
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Relations +1 908 882 2310
christopher.sharkey@ambest.com
Al Slavin Senior Public Relations Specialist +1
908 882 2318 al.slavin@ambest.com