Few Changes In Evaluation Of Lloyd's Syndicates

Standard & Poor's mid-year assessment of most Lloyd's syndicates registered few changes for the group despite several units posting record returns.

Standard & Poor's credit analyst Matthew Day said the agency has raised its assessment on one syndicate and downgraded two others. In addition, one assessment has been assigned for the first time, and three others withdrawn.

"Our assessments had already factored in the expected benefits following the hardening of the insurance markets post hurricanes Katrina, Rita, and Wilma," said Mr. Day. "In fact, in a large number of cases the sustainability of the strong turnaround in performance remains untested by more challenging underwriting conditions."

In total, Standard & Poor's assesses 40 out of the 66 syndicates trading in the Lloyd's Market (Lloyd's or the Market; A+/Stable), 11 on an interactive basis. These 40 syndicates account for 71 percent of the Market's 2007 underwriting capacity (80 percent in 2006). In addition, two of the unassessed syndicates carry an insurer financial strength rating, based on an explicit parental guarantee, accounting for a further 6 percent of capacity.

Standard & Poor's Lloyds Syndicate Assessment evaluates the relative dependency of syndicates on Lloyd's infrastructure and Central Fund, reflecting their ability to offer business continuity to policyholders. Standard & Poor's financial strength rating on Lloyd's is the principal measure of financial strength to be applied to all syndicates underwriting in the Lloyd's Market.

"As the LSAs are a relative assessment, they have not been directly affected by the upgrade of the Market on April 23, 2007. There may, however, be potential benefits to some syndicates over the medium term as the overall attractiveness of the Market has improved," said Mr. Day.