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Fitch Ratings said it expects Lloyd’s of London to report a reduced level of income in 2010 compared to 2009, but affirmed the company’s Insurer Financial Strength rating of “A-plus.”
Fitch said that Lloyd's 2009 performance was supported by a series of beneficial factors that are unlikely to be repeated in 2010. These included a benign U.S. windstorm season, a recovery in investment results, favorable foreign exchange movements in respect to gross written premium growth and improved pricing conditions, Fitch said.
The rating affirmation reflects Lloyd's strong operating performance during 2009, with reported results ahead of expectations, Fitch said.
Fitch said the stable outlook reflects its expectation that 2010 will prove to be a more challenging year for Lloyd's.
“A series of large losses that occurred in the first quarter of 2010 has worsened underwriting performance for both primary and reinsurance participants, including Lloyd's,” Martyn Street, an associate director in Fitch's Insurance Group, said in a statement.
He added, “When considered against other factors, including Fitch's expectation of reduced investment returns and a pricing environment that is less favorable than that experienced during 2009, the agency anticipates that Lloyd's will report a reduced level of earnings for 2010.”
Despite this expectation, however, Fitch said it believes Lloyd's will remain profitable and continue to strengthen its financial profile going forward.
Market participants at Lloyd's collectively underwrote ₤22 billion ($33.34 billion) of gross written premiums in 2009, marking a year-on-year increase of 22 percent and profit before tax of ₤3.9 billion ($5.9 billion), a year-on-year increase of 103.7 percent.
Also announced today, the Navigators Group Inc. said its wholly owned syndicate, Navigators Syndicate 1221 at Lloyd’s, is the latest to co-locate with Lloyd’s in Rio de Janeiro by appointing a local representative.
Lloyd’s has Admitted Reinsurer status in Brazil and had its official opening there in April 2009.
“Having a qualified local representative in Rio de Janeiro will significantly improve our prospects of developing reinsurance business in the energy industry segment in which we specialize,” commented Stephen Coward, president of Navigators Technical Risk.
LoriAnn Lowery-Biggers, president of field operations for Navigators, formerly served as president of Lloyd’s North America.
The Navigators Group Inc. is an international specialty insurance holding company with insurance company operations, underwriting management companies and operations at Lloyd's of London.
Lloyd's has a global franchise and operates in more than 200 countries and territories. It is a leading market for reinsurance and specialist property, casualty, marine, energy and aviation insurance.