Lloyd's rating change July 2023

AM Best improves rating outlook for the Lloyd’s market

AM Best, the rating agency, has recently updated its rating outlook on Lloyd’s, its rated subsidiaries and the Society of Lloyd’s. The details of its findings give a positive indicator regarding Lloyd’s financial stability and should improve confidence for Argenta’s clients currently underwriting at Lloyd’s. The remedial action taken, both at syndicate and also at corporation level by Lloyd’s, is now strongly evident in the results and forecasts being reported by syndicates.

Members will be aware of the strongly improving trends over the past couple of years, and this review validates our central thesis, now is a good time to be invested in Lloyds.

To summarise, AM Best, has revised the outlooks for the Lloyd’s of London insurance Company to positive from stable, and affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of "a+" (Excellent) of Lloyd’s (United Kingdom), Lloyd’s Insurance Company (China) Limited (Lloyd’s China) (China), and Lloyd’s Insurance Company S.A. (Lloyd’s Europe) (Belgium). Concurrently, AM Best has revised the outlooks to positive from stable and affirmed the Long-Term ICR of "a" (Excellent) of Society of Lloyd’s (the Society) (United Kingdom) and the Long-Term Issue Credit Ratings of "a-" (Excellent) on the GBP 306 million 4.750% subordinated loan notes maturing 30 October 2024, as well as on the GBP 300 million 4.875% subordinated notes maturing 7 February 2047. (See further rating actions on various syndicates below.)

These Credit Ratings (ratings) reflect Lloyd’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, favourable business profile and appropriate enterprise risk management.

The positive outlooks reflect, in part, actions taken over a number of years to improve the resilience of Lloyd’s balance sheet. This includes the introduction of the Lloyd’s Central Fund insurance and limits put in place to reduce excessive risk taking by individual syndicates. Furthermore, Lloyd's has continued to demonstrate the successful application of its "coming into line" (CIL) process, following a series of challenging years, due to the COVID-19 pandemic, elevated catastrophe activity and the conflict in Ukraine, which has shown Lloyd’s ability to consistently re-capitalise and grow capital year-over-year. AM Best expects Lloyd’s to continue delivering a strong operating performance over the underwriting cycle, as well as successfully execute its modernisation strategy.