S&P has revised the outlook on Lloyd's after the announcement by Equitas that it has
Standard & Poor's has revised the outlook on Lloyd's to positive from stable. At the same time, the 'A' insurer financial strength ratings on Lloyd's were affirmed, as well as the 'A' counterparty credit rating on The Society of Lloyd's.
The move follows the Equitas group's announcement today that it has signed an agreement in principle with National Indemnity to provide substantial reinsurance protection to its subsidiary Equitas Ltd. The transaction, set to be completed by March 2007, could see Equitas Ltd receive up to £3.8bn of additional cover above and beyond its existing undiscounted net reserves.
Standard & Poor's recognised that based upon what has been disclosed so far it may remove any realistic potential for reserve inadequacy at Equitas Ltd. to undermine confidence in Lloyd's — in particular, amongst clients, brokers, and capital providers.
The ratings continue to reflect Lloyd's strong competitive position, strong operating performance, strong capitalisation, and strong financial flexibility (defined as the ability to source capital relative to capital
requirements). These positive factors remain partly offset, however, by the London market's legacy administrative processes, relatively high reinsurance
reliance and significant exposure to reinsurance recoverables, and continuing operating performance volatility.
Recent Related News
Lloyd's welcomes $7bn Equitas deal
Equitas hikes reserves for asbestos claims
S&P: Lloyd's in strong competitive position
