The ability of the Lloyd’s of London insurance and reinsurance market to recapitalise could be threatened if there are further major losses over the remainder of this year, according to analysts at Fitch Ratings who maintain a negative outlook on Lloyd’s ratings.Also at Artemis:
As a result of the recent catastrophe losses, Fitch expects that Lloyd’s capitalisation could fall to levels that are no longer commensurate with its ratings, but it does expect the market will recapitalise successfully, through its next coming into line process that completes before the end of 2017.
But, should there be additional major losses, natural catastrophe or otherwise, before that process is completed, then the Lloyd’s market could be at-risk of failing to recapitalise and as a result its ratings could be impacted.
Lloyd’s has already revealed a $4.5 billion estimated market loss from just hurricanes Harvey and Irma. Add in the losses expected from hurricane Maria, the Mexico earthquakes and also the ongoing California wildfires and it is easy to see why analysts are increasingly negative on reinsurance players, including Lloyd’s.
But so far losses appear to be within tolerances, Fitch says, meaning that it expects the recapitalisation will proceed as expected and Lloyd’s can maintain its level of capital and associated ratings.
Throw another major catastrophe into the mix though, or an outsized loss from hurricane Maria, and Lloyd’s ratings could come under increasing pressure and the market may find its recapitalisation much more difficult.
The type of investors that will look to recapitalise Lloyd’s now have options, with insurance-linked investment vehicles offering them a way to recoup a much purer reinsurance and risk linked investment opportunity....MORE
Lloyd’s lowers Harvey & Irma loss to $3.9bn, adds $900m Maria loss