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The issue level rating of Lloyd’s Subordinated Tier 2 Notes was upgraded from ‘BBB+’ to ‘A-‘ by S&P Global Ratings.
“Lloyd’s market-wide regulatory solvency ratios and central solvency ratios are subject to significant reservations due to the Russia-Ukraine conflict and Hurricane Ian, rising interest rates and investments in private assets through our newly launched investment platform. remained stable into 2022,” the rating said. Agencies in the announcement emailed to Insurance Business over the weekend.
“Lloyds has sufficient capital surplus with both a market wide regulatory solvency ratio of 179% (177% at the end of 2021) and a central solvency ratio of 395% (388% at the end of 2021) in the first half of 2022. Even in extreme stress scenarios such as events, or if the current inflation environment continues into 2023 and 2024, we expect both the overall market and central solvency ratios to remain strong.”
Meanwhile, S&P Global expects Lloyd’s to have a combined ratio of around 95% at the end of 2022. Considering a combined ratio of 91.4% for the half year, he has set aside £1.1bn each for the Russo-Ukrainian war and he has £2.2bn. and Hurricane Ian. Combined for 2023 he expects his ratio to be near 95%.
S&P Global “recognizes that the level of Lloyd’s solvency cover may fluctuate due to natural catastrophe risks, a challenging macroeconomic environment due to rising inflation, and uncertainty over the conflict between Russia and Ukraine.” said.
“However, this will be offset by the stability of the solvency ratio, better earnings expectations and the ability to recapitalize when needed, which will be maintained in 2022. The latter will follow Hurricanes Harvey, Irma and Maria in 2017 This was demonstrated when the market injected £3bn in 2020, and another £3.5bn in 2020 following COVID-19 related losses.”
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