Fitch affirms Lloyd's A+ rating

Fitch has today affirmed Lloyd's of London's insurer financial strength (IFS) rating at 'A+'.

Fitch has also affirmed the Society of Lloyd's long-term issuer default rating (IDR) at 'A', and affirmed Lloyd's Reinsurance Company's (China) IFS rating at 'A+'.

Fitch said all three ratings have stable outlooks. Fitch has additionally affirmed Lloyd's subordinated debt issues, as detailed at the end of this comment, at 'BBB+'.

"The rating affirmation reflects the strong financial profile of Lloyd's and robust operating performance so far during 2010, which has been achieved against an uptick in major loss events in H110," Fitch said in a statement.

"The rating action also reflects Fitch's expectations that Lloyds' FY2010 results will exceed the agency's earlier forecast, which anticipated FY2010 net income of GBP1.75bn. Lloyd's strong capital position and the conservative allocation of both several and mutual assets are also viewed as positive rating factors.

"While Fitch expects lower premium pricing and reduced levels of investment income to create further earnings pressure in 2011, the agency believes that Lloyds' strong capital will help to mitigate the effects of any earnings volatility, with this expectation being reflected by the stable outlook."

Fitch Insurance Group director Martyn Street said: "While the series of large losses experienced in the first half of 2010 has resulted in a deterioration in the 2010 underwriting performance versus the strong 2009 result achieved in relatively benign conditions, Fitch believes that prior year reserves will show a respectable level of surplus.

"Fitch also views positively the fact that Lloyd's has to date not had to revise its initial loss estimates upwards for the major events that occurred in H110."