A.M. Best Co. affirmed the “A-” rating of the Lloyd’s market and has removed the “under review” status of the rating, which was applied in the aftermath of the terrorist attacks in the U.S. on Sept. 11, collectively referred to as the WTC losses.
A.M. Best affirmed the rating because it believes the capital supporting underwriting in 2002 will increase, the impact of WTC on the Central Fund is containable, and there is stability in Lloyd’s estimate of the market’s gross loss. Two billion U.S. dollars have successfully been transferred to Lloyd’s trust funds in the U.S., and A.M. Best believes the market’s WTC reinsurance recoveries will be widely spread among high quality reinsurers. Offsetting factors include the absolute size of Lloyd’s WTC loss and some uncertainty over future development of the loss; the market’s dependence on a high level of reinsurance recoveries; and poor open year performance.
A.M. Best believes Lloyd’s is likely to trade successfully through the recent period of losses, including the WTC loss in September, and that the market will be in a strong position to take advantage of the favorable pricing environment anticipated for 2002. It also believes, assuming normal loss experience, the market will produce a healthy return on capital employed for the year.
A.M. Best expects central assets available to meet unpaid cash calls to be higher at the end of 2002 than at the end 2001 and that maintenance of the Central Fund at a minimum of the pre-WTC level— including insurance protection—will be an ongoing feature of the market.
Topics Excess Surplus AM Best Lloyd's
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