Lloyd’s took issue with Moody’s Investors Service’s decision to downgrade five of its leading underwriting syndicates, and its implications that the provisions of its central fund, which is called upon to pay claims if a syndicate and its investors are unable to do so, were inadequate.
Moody’s announced that it had downgraded syndicates 1007 and 1212, SVB; syndicate 2001, Amlin; syndicate 2488, ACE, and syndicate 2020, Wellington on fears that their reserves were at present at the low range of “adequate,” and had the potential to become “questionable.”
Lloyd’s has consistently indicated that the central fund is more than adequate to meet any claims the syndicates may be unable to cover, and has also said that it provides internal financial information to only two ratings agencies, A.M. Best and Standard & Poor’s (See IJ Website Oct. 24). It pointed out that while Moody’s is one of the most respected rating agencies in the financial services field, it has limited experience in rating insurance syndicates, and had made the downgrades based on inadequate and incomplete information.
Lloyd’s pointed out that neither S&P nor A.M. Best have made any further downgrades after initially reviewing the potential financial implications of the Sept. 11 attacks, and according to the Financial Times called Moody’s action proof that “a little knowledge is a dangerous thing.”|”lloyd’s, reacts, moody’s, downgrade, of, 5, syndicates
Topics Excess Surplus Lloyd's
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