A.M. Best Maintains Stable Outlook on London Market Insurance Segment

A.M. Best said it is maintaining its stable outlook on the London market insurance segment, citing such factors as continuing upward premium rate momentum, which Best expects to support better underlying performance, and reduced uncertainty around COVID-19 losses.

A new Best's Market Segment Report, titled "Market Segment Outlook: London Market Insurance," also noted the London market's focus on modernization, which the rating agency said should reduce cost, along with the greater accessibility of third-party capital to the London market as factors supporting its stable outlook.

Best noted that there are factors moderating those positives, including modeling challenges presented by changing climate trends. The rating agency also cited US casualty reserve adequacy concerns, prompted by adverse claims inflation trends. The London market also faces increased losses for insurance coverage lines affected by supply chain disruptions, labor shortages, and rising general inflation, particularly for property business, Best said.

Best said the Russia-Ukraine conflict is likely to be a major, though manageable, loss for the London market. "However, there is material uncertainty associated with the magnitude of potential direct and second order losses, particularly as claims will be highly complex and could be litigated for many years," Best said.

Copyright © 2022 A.M. Best Company, Inc. and/or its affiliates. ALL RIGHTS RESERVED.