Since Lloyd's moved to annual reporting from its much criticized previous accounting regime, the level of disclosure has declined, according to a report released today by Standard & Poor's.
Under the Companies Act and Generally Accepted Accounting Principles in the U.K., which were adopted by syndicates for the first time in 2005, there is "reduced consistency and transparency of the information now available in the public domain to appraise syndicates," the rating firm said.
Syndicates beginning with the financial year ended Dec. 31, 2005 were required to publish audited financial statements prepared on an annual accounting basis.
S&P analyst Peter Grant said S&P supports Lloyd's decision to move to annual reporting, but there have been costs.
"By moving to the standards of the company market, however, a number of valuable disclosures previously made by syndicates have been, or are in the process of being, lost," he added.
Syndicates supported by traditional names will, at the discretion of their names, continue to provide the fuller disclosure. But wholly aligned syndicates, fully within their rights, are increasingly opting not to do so, thereby reducing the consistency of syndicate reporting.
This lack of consistency, coupled with the inferior level of disclosure required under U.K. GAAP, has, in Standard & Poor's opinion, led to a reduction in the quality of information available in the public domain with which to appraise the relative attributes of the syndicates that comprise the Market.
Some of the areas where greater transparency is urged include movements in prior-year reserves, reinsurance dependence on Lloyd's, open-year forecasting, members' funds and segmental reporting.
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