Credit ratings agency AM Best has affirmed its A (Excellent) rating for Lloyd’s of London, saying the market should maintain a solid and flexible capital base into next year.

Central solvency capital should stay strong at over £2.5 billion ($5.2 billion) compared with £2.6 billion ($5.4 billion) last year, after allowing for the buy-back of £102 million ($211 million) of subordinated debt.

AM Best expects less potential for drawdowns on Lloyd’s Central Fund as a result of a further decline in run-off liabilities and increased oversight of syndicates reducing the likelihood of future insolvencies.

The market’s financial performance is tipped to remain in good health this year, although there may be some deterioration due in part to the absence of the foreign exchange gains booked last year.

Given the magnitude of last year’s catastrophic events and the challenging investment environment, Lloyd’s £1.9 billion ($3.9 billion) pre-tax profit is a good result, the agency says.

“Lloyd’s has an excellent business profile, particularly in the US and London market, and continues to expand its global reach through extension of its licence network and local platforms.”