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New regional hubs pose threat to Lloyd’s: AM Best

Lloyd’s faces a challenge to its competitive position in an increasingly difficult operating environment, according to ratings agency AM Best.

It has affirmed the financial strength rating of A and long-term issuer credit rating of A+ for Lloyd’s in the UK and China, reflecting its “strong and stable risk-adjusted capitalisation, excellent business profile and recent strong underwriting performance”.

But AM Best adds that Lloyd’s “excellent position” in the global insurance and reinsurance markets could be challenged.

“In particular, the growth of regional (re)insurance hubs, combined with the comparatively high cost of placing business at Lloyd’s, is reducing the flow of business into the London market.”

Lloyd’s is responding to the threats, AM Best says.

“Improved access to international business is being supported by the Vision 2025 strategy and the establishment of regional platforms, and Lloyd’s continues to implement initiatives to improve efficiency and reduce operating costs.

“AM Best will continue to closely monitor Lloyd’s ability to defend its strong competitive position against the prevailing market headwinds.”