Lloyd's business profile 'favourable' – Fitch

Lloyd’s business profile ‘favourable’ – Fitch | Insurance Business New Zealand

Insurance News

Lloyd’s business profile ‘favourable’ – Fitch

Rating report highlights centuries-old marketplace’s strengths

Insurance News

By
Terry Gangcuangco

Fitch Ratings has published a new rating report on Lloyd’s, highlighting the centuries-old marketplace’s advantages over the rest of the global insurance market.

The credit rating agency noted: “Fitch Ratings ranks Lloyd’s of London’s business profile as ‘Favourable’ compared with that of global insurance and reinsurance companies.

“The ranking is driven by the market’s strong franchise, large operating scale, and significant diversification within property and casualty insurance and reinsurance.”

The report comes three weeks after Fitch Ratings affirmed the ‘AA-’ (very strong) Insurer Financial Strength (IFS) ratings for Lloyd’s. The IFS rankings apply to Lloyd’s in London and its subsidiaries Lloyd’s China and Lloyd’s Europe.

“Lloyd’s is one of a small group of global (re)insurance providers capable of attracting high-quality and specialised business,” Fitch Ratings pointed out in its report.

“Lloyd’s central solvency coverage ratio was very strong at 503% at end-2023 (end-2022: 412%). This is comfortably in excess of the company’s risk appetite. The market-wide solvency ratio was also very strong at 207% (181%).”

Earlier this month, the credit rating agency cited the “very strong company profile and capitalization and leverage” enjoyed by Lloyd’s. Its improved financial performance and earnings, along with strong reserve adequacy, were also highlighted.

“Lloyd’s employs a unique-to-the-market annual ‘coming into line’ process, which ensures a certain capital level is maintained and that all members have sufficient eligible assets to meet their underwriting liabilities,” Fitch Ratings said at the time.

“In the longer term, this resilience relies on the willingness and ability of members to recapitalise following significant losses. A failure to recapitalise would result in the member being unable to continue underwriting through Lloyd’s.”

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