Lloyd's Security Improves, Says Moody's

Lloyd's overall policyholder security in relation to syndicates currently trading in the market has improved materially in the past year, Moody's Investors Service reported.

Increased central assets, declining calls on the central fund and the effective resolution of Equitas have all enhanced the minimum security offered by Lloyd's for all syndicates, the Moody's study said.

Robert Smith, vice president and senior analyst as well as author of the report, said that Lloyd's remains an effective and attractive trading platform to most entities.

"Lloyd's global franchise, access to diversified business and its reduced capital requirements offset disadvantages such as the potential for additional costs due to mutuality, the need to improve efficiency and applicable U.K. tax rates," Mr. Smith said.

Moody's commented that Lloyd's current senior management has had a good track record in addressing many of the long-standing issues facing Lloyd's.

The report noted a significant improvement in the levels of management expertise and sophistication of management controls since the last insurance downturn.

Furthermore, Lloyd's Franchise Performance Directorate seems likely able to curtail the extent of the losses seen during previous downturns, said Moody's.

However, the ratings agency acknowledges it remains to be seen how Lloyd's new procedures and revised membership profile perform during their ultimate test at the next low point in the insurance cycle.