AM Best has upgraded its financial strength rating for Lloyd’s, noting the market’s healthy balance sheet, operating performance, “very favourable” business profile and enterprise risk management.

The rating has moved to A+ (superior) from A (excellent), while the long-term issuer credit rating has moved to AA- from A+.

AM Best says Lloyd’s has an excellent position in the global insurance and reinsurance markets as a leading writer of specialty property and casualty risks.

“The growing size of the market demonstrates its ability to attract and retain investors due to its unique business proposition that offers a capital-efficient structure and the ability to write business globally,” it says.

The ratings agency expects the market to produce a strong underwriting performance over the cycle and says capital will continue to be attracted to Lloyd’s.

“Improved pricing conditions, as well as the robust performance oversight by the corporation, materialised in measurable improvements in underwriting performance over recent years.”

But the market’s expense ratio continues to be higher than its peers.

“Actions are being taken through the Future at Lloyd’s initiative to reduce the cost of placing business at Lloyd’s, although any benefits will likely take time to materialise.”

The AM Best move follows S&P Global’s upgrade late last year.

Lloyd’s CFO Burkhard Keese says capital management continues to be a focus, to ensure the market’s attractiveness for customers, participants and investors.

“Our financial strength and solid capital platform enable us to deliver on our strategic growth ambitions and explore new and innovative solutions to enhance the fungibility of capital for our members,” he said.

Lloyd’s is due to release its half-year results on September 5.