The following are extracts from the AM Best report:

Positive points in the rating:

1) the risk-adjusted capitalization being at the strongest level, as measured by Best's Capital Adequacy Ratio;

2) Capital adequacy is supported by a robust risk-based approach to setting member-level capital and a strong Central Fund....enhanced by the diversity of its capital providers;

3) the expectation that Lloyd's will produce strong technical performance over the underwriting cycle and that capital will continue to be attracted to the market;

4) the strong position of Lloyd's in its core markets, as a leading writer of reinsurance and specialty property/casualty insurance, Lloyd's has an excellent brand in these markets, which are currently experiencing improving market conditions.

Offsetting points in the rating:

1) Technical performance is subject to volatility due to the nature of the business underwritten, and since 2017, the market has experienced higher-than-average catastrophe losses and lower favorable prior-year reserve releases; adjusted for average catastrophe experience, recent technical performance has been outside AM Best's expectations for the strong assessment. However, AM Best expects that improving market conditions and robust remedial actions by the Corporation of Lloyd's and individual managing agents will support further incremental improvements in the attritional accident-year performance over the next three years;

2) The market's exposure to catastrophe risk is an offsetting rating factor. However, the requirement for members to replenish their funds at Lloyd's to meet their current underwriting liabilities, as part of the "coming into line" process, partly mitigates the potential for volatility in risk-adjusted capitalization due to operating losses. Despite losses associated with the coronavirus pandemic, risk-adjusted capitalization has been stable as member-level capital has been replenished in line with expectations;

3) The market's expense ratio continues to be higher than that of its peers. Actions are currently being taken through the Future at Lloyd's initiative to reduce the cost of placing business at Lloyd's, the benefits of which should start to be realized over the short-term;

4) The market's business mix is well-diversified but with some geographical bias toward North America and product bias toward moderate to high-risk commercial specialty lines.