Equitas Ltd., the Lloyd's runoff company for asbestos and other long-tail claims, has made progress in reducing its balance sheet exposure, according to a Standard & Poor's report on the operation's 10th anniversary.

"It would be fair to say this is an anniversary that many did not think the group would be able to celebrate when it was established in 1996," said S&P London-based analyst Marcus Rivaldi.

The Equitas group's opening balance sheet on Sept. 4, 1996 had total liabilities of $29 billion, which has been reduced to $7.6 billion as of March 31, a fall of 71 percent.

Equitas was formed to assume liabilities stemming from long-tail asbestos, pollution and health claims, which contributed to issues threatening Lloyd's solvency at the time.

Much of the exposures have been reduced through commutations and policy buyouts, the report said.

As Equitas still is a significant rating factor for Lloyd's, the fact there remain some scenarios in which it is insufficiently capitalized to run off successfully means there still is the potential for the carrier to have a negative impact on Lloyd's overall in terms of confidence among brokers, clients and capital providers, Mr. Rivaldi said.

Nonetheless, the "unparalleled understanding of the asbestos issue from underwriting, political and legal perspectives" demonstrated by the team deserves praise, he added.

Special Reports /

Lloyd's Equitas Marks 10th Year

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