International rating agency Fitch said Lloyd's latest estimates of its losses from the 11 September terrorist attacks on the US support its current rating.
But it said if the estimate deteriorated significantly over time, Lloyd's could face further downward pressure on its rating.
Fitch downgraded Lloyd's insurer financial strength rating on 21 September to A-minus from A-plus, and placed it on Rating Watch Negative pending clarification of Lloyd's losses from the September attacks.
Yesterday, Lloyd's raised its own loss estimate by 45% to £1.9bn from £1.3bn.
Fitch said the increased loss estimate confirmed its view that initial estimates of the insured loss for large catastrophes had normally been understated.
It said an accurate figure of the ultimate loss from the attacks in the US would take some time to emerge due to the complex nature of assessing such a loss, and in particular, identifying business interruption and liability losses.
Lloyd's also updated its forecasts for the 1999 and 2000 underwriting years yesterday.
Fitch said it was concerned Lloyd's loss estimates for both underwriting years, £1.67bn and £1.49bn respectively, were already higher than Fitch's current estimates of £1.5bn and £1.4bn.
It said the pure year estimates assumed Lloyd's syndicates would not incur significant bad debts in respect of reinsurance and retrocessional recoveries. Should reinsurance collectibility become an issue for the Lloyd's market, Fitch would make further adjustments to these estimates, it said.
The rating agency added that there was an intention among several leading Lloyd's operations to establish new insurance companies outside the market next year. It said although those companies would still maintain an interest in Lloyd's, the trend could diminish Lloyd's ability to attract and maintain capital.
Fitch said it believed this diversification strategy would reduce reliance on Lloyd's as a major distribution source. Companies would have more control over their own underwriting plans and cost structure without the need to support Lloyd's centrally, and possibly other poor-performing Lloyd's entities through additional levies, it said.
