A.M. Best Affirms Credit Ratings of Lloyd’s
The rating affirmations reflect Lloyd’s strong and stable risk-adjusted capitalisation, excellent business profile and recent strong underwriting performance.
Lloyd’s benefits from strong and stable risk-adjusted capitalisation, supported by a robust risk-based approach to setting member level capital. The exposure of central resources to insolvent members has fallen significantly over the past 10 years and is now at a very low level. Lloyd’s financial flexibility remains good, enhanced by the diversity of its capital providers, which include corporate and non-corporate investors.
Operating performance has been good in recent years, supported by strong technical performance as demonstrated by an average five-year combined ratio of 90% (2012-2016). The combined ratio deteriorated in 2016 to 97% from 89% for 2015, primarily due to a higher major loss burden and a reduction in reserve releases. Major losses accounted for approximately 9 percent of net earned premium in 2016, which is in line with the market’s 10-year average. Assuming average catastrophe experience, technical performance in 2017 is expected to be in line with 2016.
Lloyd’s benefits from an excellent position in the global insurance and reinsurance markets. The collective size of the Lloyd’s market and its unique capital structure enable syndicates to compete effectively with large international insurance groups under the well-recognised Lloyd’s brand. However, an increasingly difficult operating environment poses challenges to Lloyd’s competitive position. In particular, the growth of regional (re)insurance hubs, combined with the comparatively high cost of placing business at Lloyd’s, is reducing the flow of business into the
This press release relates to Credit Ratings that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and
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