Weakest syndicates pull out from Lloyd's
LLOYD'S of London has shed many of its weakest syndicates this year, according to Standard & Poor's, the credit rating agency, writes Diane Coyle.
However, it said the level of security in the insurance market was still not clear because of the uncertain size of former liabilities.
In its annual ranking of Lloyd's syndicates, S&P found that 50 per cent of the 159 assessed could be classified as above average in financial strength, up from 40 per cent out of a total of 178 in 1993.
Only five out of the 159 were classified as downright weak, while 35 were 'below average' and 39, or 25 per cent, were 'average'.
Last year, when the agency used only three classifications, 26 per cent of syndicates were below average while 34 per cent were average.
S&P said it believed the weaker syndicates had stopped trading and the frequency of cessations was now beginning to fall. Last year 25 syndicates ceased trading compared with 35 in 1992.
Lloyd's has set a 1996 deadline for the creation of NewCo, a company that will hold all the 'long-tail' liabilities related to pollution and asbestos. These liabilities would be 'ring-fenced', leaving Lloyd's free of their legacy.
S&P said it did not believe it was possible to quantify the amount of funds needed to cover all possible claims and there were too many unanswered questions about what would happen if NewCo ran out of money.
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