Lloyd’ rating upgraded on capital and performance gains

Rating agency A.M. Best has upgraded the financial strength rating of Lloyd’s of London to “A” from “A-“, citing overall improvement for the London market and the expectation of further growth.A.M. Best predicts the market’s central solvency capital will rise by 2008 to US$3.7 billion, and that as market conditions deteriorate the market will reduce underwriting capacity to better manage the cycle. The rater adds that results for 2002 and 2003 will be above Lloyd’s current estimates, and 2004 results will see the fruition of 2003 rate increases. 2004 should produce a combined ratio in the area of 89.2% (much like 2003), and pre-tax profit of US$3.5 billion. 2005 will likely also produce a combined ratio below 95%.The only offsetting factor named is the continuing exposure to Equitas, Lloyd’s operation to deal with prior year asbestos claims, although A.M. Best predicts there will be little negative impact from Equitas in the near future.