A.M. Best gives Lloyd’s positive outlook from stable

Rating agency A.M. Best has revised the outlook for Lloyd’s from stable to positive, based on the market’s strong operating performance in spite of a high number of natural catastrophes in recent years.

Lloyd’s now has a financial strength rating of A (excellent) and an issuer credit rating of “a+” from A.M. Best. The firm has also given a positive outlook (from stable) to Lloyd’s Insurance Company (China) Limited.

It has also affirmed the issuer credit rating of “a” for the Society of Lloyd’s, revising its outlook to positive from stable.

The changes are also based on “A.M. Best’s assessment of the robust oversight of the market by Lloyd’s Performance Management Directorate and its demonstrable success in reducing earnings volatility,” the agency said,

“The outlook also reflects the steady improvement in the market’s risk-adjusted capitalization and A.M. Best’s expectation that the current level of capitalisation will be maintained for the foreseeable future.”

After a loss in 2011, one of the worst years in terms of natural catastrophe losses, Lloyd’s reported a 2012 profit of £2.77 billion, despite losses from the Costa Concordia disaster, Hurricane Isaac and “Superstorm” Sandy, A.M. Best noted.

If 2013 is a normal year for catastrophe events, the rating agency said it expects a similar performance for Lloyd’s as last year.