Lloyd’s Affirmed, Negative Outlook Removed

A.M. Best Co. has affirmed the “A” rating of Lloyd’s and removed its negative outlook.

The negative outlook was affirmed June 28 to reflect A.M. Best’s concerns over the accelerating rate of asbestos-related claims, which could lead to a significant shortfall in Equitas’ reserves. The negative outlook has been removed because A.M. Best’s assessment of these results and scenario stress testing undertaken on key variables have led A.M. Best to believe that Lloyd’s is unlikely to be adversely affected by Equitas in the foreseeable future. A.M. Best’s modeling also provides comfort that Lloyd’s has the systems in place to manage any possible shortfall at Equitas should the current expectations of asbestos claims development be exceeded beyond the capacity of its balance sheet.

Nevertheless, A.M. Best believes it will be many years before it is possible to determine whether Equitas can adequately run-off its liabilities. The current uncertainty over Equitas’ reserve development will remain a long-term factor in A.M. Best’s rating analysis.

The current rating reflects Lloyd’s excellent financial strength, strong business profile, strengthening of regulatory control and prospective improvements in operating performance. The rating applies to the business underwritten by all active syndicates, and to all policies underwritten since the 1993 year of account.