Lloyd’s rating affirmed by Fitch

Rating agency Fitch has affirmed Lloyd’s of London’s Insurer Financial Strength (IFS) rating at 'A+'.

Fitch has also affirmed the Society of Lloyd's Long-term Issuer Default Rating (IDR) at 'A' and Lloyd's Insurance Company (China) Ltd's IFS rating at 'A+'. All three ratings outlooks are stable.

In a statement the rating agency said: “The affirmations reflect the strong financial profile of Lloyd's, which has demonstrated the ability to absorb what proved to be an unprecedented level of natural catastrophe losses sustained by the insurance industry during 2011. The rating actions also reflect Fitch's expectations that Lloyd's earnings will recover through 2012, driven by a marked improvement in the underwriting result.

“The agency's central forecast includes a pre-tax profit of GBP1.6bn and combined ratio of 95%, assuming a normalised level of catastrophe losses through the remainder of 2012. Lloyd's strong capital position and the conservative allocation of both several and mutual assets are also viewed as positive rating factors.

“Fitch remains cautious about the significance that rising premium prices will play in improving 2012 profitability, noting that meaningful premium rate rises during H112 have been confined to loss affected insurance classes and geographies. This expectation is reflected by the Stable Outlook.”