A Better Credit Rating for Lloyd’s Has Been Granted by S&P Global

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Lloyd’s, the insurance and reinsurance market, has been granted an improved debt rating by S&P Global. The issue-level rating on Lloyd’s subordinated Tier 2 notes has been raised from ‘BBB+’ to ‘A-‘, one of the highest ratings given by S&P Global.

This new rating is a testament to Lloyd’s financial strength and ability to withstand economic volatility. The upgrade reflects Lloyd’s improved capital resources, enabling it to absorb shocks effectively and mitigate risk.

“Lloyd’s market-wide regulatory solvency ratio and central solvency ratio remained stable over 2022, despite significant reserving for the Russia-Ukraine conflict and Hurricane Ian, rising interest rates, and investments in private assets through its newly launched investment platform,” noted the rating agency in an announcement emailed to Insurance Business over the weekend.

In making this decision, S&P Global noted that Lloyd’s maintains a suitable risk profile due to its diversified portfolio of businesses and flexible balance sheet structure. The firm prides itself on efficiently managing risks and capital while producing attractive returns for its stakeholders.

The improved debt rating from S&P Global will positively impact Lloyd’s operations moving forward. For example, a higher rating will give investors greater confidence in the company when considering long-term investments or transactions with them. This results in increased capital flow for the company over time.

Additionally, it will help lower interest rates associated with any future borrowing activities of Lloyd’s as lenders are likely to offer better terms than before, given the substantially lower default risk associated with a higher credit rating.

“We note that Lloyd’s significant exposure to natural catastrophe risk, the challenging macroeconomic environment due to rising inflation, and uncertainty around the Russia-Ukraine conflict provide the potential for volatility in the level of its solvency cover,” said S&P Global.

Overall, this improved debt rating from S&P Global is a significant win for Lloyd’s. This new rating should provide greater assurance to investors looking to do business with them moving forward.

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