AM Best has upgraded Lloyd’s outlook from stable to positive, reflecting the market’s strong operating performance in recent years and improved capitalisation.

The ratings agency has also affirmed Lloyd’s financial strength rating at A and its issuer credit rating at A+.

It says the market’s performance management directorate, which works with Lloyd’s businesses to improve commercial performance, has reduced earnings volatility and provided “robust oversight”.

Lloyd’s performance this year is expected to be similar to last year, despite some significant losses in the first half. AM Best expects a combined ratio of 95%.

The ratings agency has also upgraded the outlook for several Lloyd’s syndicates from stable to positive, including groups managed by Hiscox, Beazley Furlonge, Catlin and Markel.