Standard & Poor's Ratings Services said today it assignedits "A" long-term insurer financial strength rating to Lloyd'snewly approved Chinese reinsurance subsidiary and the outlook ispositive.

The rating went to Lloyd's Reinsurance Co. China Ltd., anunderwriting subsidiary of U.K.-based Corporation of Lloyd's, theorganization that oversees the London-based Lloyd's insurancemarket.

Lloyd's announced two weeks ago that the China InsuranceRegulatory Commission had approved a license to underwrite onshorereinsurance business throughout China.

The new operation, Lloyd's said, will provide Chinese insurerswith full access to the Lloyd's market and give Lloyd's improvedaccess to the Chinese reinsurance market. An opening ceremony forthe new office is set for April 16 in Shanghai.

Standard & Poor's credit analyst Rob Jones said the ratingon Lloyd's China is "based upon explicit support provided to itfrom the Lloyd's market via full quota-share retrocession of allbusiness underwritten by it exclusively to syndicates trading atLloyd's."

Mr. Jones said the new company's cedents "benefit from the fullscope of Lloyd's security, including the Market's CentralFund."

S&P said the rating on Lloyd's China reflects Lloyd's strongcompetitive position, strong operating performance, strongcapitalization and strong financial flexibility.

The rating firm noted, however, that the positive factors arepartly offset by the London Market's legacy administrativeprocesses, as well as Lloyd's relatively high reinsurance reliance,significant exposure to reinsurance recoverables and continuingoperating performance volatility.

It added that the consistency and effectiveness of the market'sstrengthened catastrophe risk controls are also yet to betested.

The rating on Lloyd's China is not capped by the ratings on thePeople's Republic of China (A/Stable/A-1) by virtue of theoperation of Lloyd's Central Fund, S&P noted.

The positive outlook on Lloyd's China, S&P concluded,reflects that on Lloyd's. Rating actions or outlook revisions onLloyd's would be replicated at Lloyd's China.