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Lloyd’s financial strength rating upgraded by AM Best

07 Aug 2024

Lloyd’s, the world’s leading marketplace for insurance and reinsurance, today announces that ratings agency AM Best has revised its financial strength rating to A+ (superior) from A (excellent) and the long term issuer credit rating to ‘AA-’ (superior) outlook stable from ‘A+’ (excellent); outlook positive.

The rating upgrade reflects Lloyd’s balance sheet strength - which AM Best assesses as ‘very strong’ – as well as its strong operating performance, and risk management expertise.

The upgrade further cites Lloyd’s ability to attract and retain investors due to its unique value proposition which offers a capital efficient structure, and the Lloyd’s market’s excellent position as the leading underwriter of global specialty property and casualty risks.

Looking ahead to Lloyd’s HY24 results on 5 September, AM Best shares Lloyd’s expectation that the market will continue to produce a strong underwriting performance.

“Today’s upgrade from AM Best follows that of S&P Global at the end of last year, with both agencies acknowledging the strength and resilience of Lloyd’s balance sheet, its strong operating performance and its leading position as the global specialty insurance and reinsurance market. >br>
“Capital management continues to be Lloyd’s focus to ensure the attractiveness of the Lloyd’s market for our customers, participants and investors. Our financial strength and solid capital platform enable us to deliver on our strategic growth ambitions and explore new and innovative solutions to enhance the fungibility of capital for our members. We were able to renew the central fund insurance early this year and are currently exploring a post major market loss contingent capital solution for eligible members.”
Burkhard Keese, Lloyd’s CFO

Notes to editors

This follows an additional upgrade from rating agency S&P Global in December 2023.

Lloyd’s ratings are AA- stable outlook with S&P Global AA- (superior) stable outlook with AM Best, AA- (Very Strong) with Fitch Ratings, AA- (strong) stable outlook with Kroll Bond Rating Agency (KBRA). 

The Central Fund Insurance is an existing multi-layered insurance cover, originally placed in 2021 and renewed in 2024, that will reimburse the Central Fund following aggregate losses in excess of $1bn. This multi-year insurance is underwritten by a panel of the world’s largest reinsurance companies and a risk transformation company financed by a leading investment bank. This protection enhances the financial strength of the Lloyd’s balance sheet from severe loss events with a remote probability of occurrence. This is a 5 year contract, however the recent renewal demonstrates that it can be considered as a longer-term solution.

Contingent Capital is a new senior debt financing arrangement that converts to qualifying solvency capital following a major market loss event.  This potential new innovative product will enhance the fungibility of solvency capital for eligible Lloyd’s members following a major market loss and provide further enhancement to the Lloyd’s balance sheet.

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