Rating agency A.M. Best has lifted its "negative outlook" on Lloyd’s of London. The agency has also affirmed the London-based market’s "A" rating. This step follows a negative outlook report which was issued on Lloyd’s on June 28 of this year based on potential asbestosis liability-related exposures. According to the rating agency, Lloyd’s short-term exposure to asbestosis claims through its troubled division Equitas initially appeared far greater. Financial figures released by Equitas to the end of March this year show a significant decline in the company’s surplus reserves, which as a percentage of net claims outstanding has dropped to 9.5% from 11.2%. However, A.M. Best believes that Lloyd’s has implemented adequate systems to manage any shortfall at Equitas in the event that asbestosis-related claims costs exceed the capacity of the company’s balance-sheet. "Key variables have led us to believe that Lloyd’s is unlikely to be adversely affected by Equitas in the foreseeable future," the rating agency states. A.M. Best says it will continue to monitor Equitas’ reserve development in light of future ratings of Lloyd’s. "Nevertheless, we believe it will be many years before it is possible to determine whether Equitas can adequately run-off its liabilities. The current uncertainty over Equitas’ reserve development will remain a long-term factor in A.M. Best’s rating analysis. If Equitas were to become insolvent, Lloyd’s could be put under pressure by regulators to meet any shortfall in Equitas reserves."