Standard & Poor’s Ratings Services announced that it has clarified its approach to the Lloyd’s Market and the methodology it uses for rating the Market’s different components.
In the just published report – “Credit FAQ: Lloyd’s–Identifying The Market’s Financial Strength” – S&P explains that its “rating methodology looks to meet the needs of both investors and policyholders by applying a number of specific ratings and assessments across the Market. The report highlights the purpose of the Lloyd’s insurer financial strength rating (FSR; A/Stable) in providing a singular measure of the Market’s financial strength.
“It uses the same rating scale as for other FSRs, and can therefore be used to compare the financial security offered by Lloyd’s with other insurance companies’. The report also explains the function of the counterparty credit rating on The Society of Lloyd’s and the subordinated debt rating, which give the capital markets the information they require on Lloyd’s capacity to meet its financial obligations under the terms of the debt it offers.
“Specifically, the report looks at why Standard & Poor’s assigns an FSR to the Lloyd’s Market but not to the individual syndicates that contribute to it, which are assigned a Lloyd’s Syndicate Assessment (LSA) that provides an opinion on the likely continuity of a syndicate.”
S&P credit analyst Matthew Day explained: “The Lloyd’s FSR is the primary rating across the Market for assessing the financial strength of Lloyd’s. However, the unique nature of the Lloyd’s Market means that both the capital and insurance markets are looking to Standard & Poor’s for ratings and assessments that allow them to put together a complete picture of the financial strength of the Market.”
The report is available to subscribers of RatingsDirect, Standard & Poor s Web-based credit research and analysis system, at www.ratingsdirect.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-9823 or sending an e-mail to: research_request@standardandpoors.com. Ratings information can also be found on Standard & Poor s public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search. All Standard & Poor’s research information is accessible for 24 hours after publication on the public Web site.
Topics Excess Surplus Lloyd's
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