Equitas celebrated its 10th anniversary last month with a word of praise from a leading rating agency.

Standard & Poor's Ratings Services issued its own report on the entity which was formed in 1996 to run-off Lloyd’s liabilities prior to 1992.

However the report says that while much has been achieved there are still some concerns that need to be addressed.

The report entitled “10 Years On, Equitas Ltd. Has Made Significant Progress, But Is Not Out of the Woods Yet," says that management rightly deserves plaudits for having maintained Equitas' solvency at its 10th anniversary. It has driven substantial reduction in the group's balance sheet exposures, while improving solvency through the use of commutations and policy buyouts.

"It would be fair to say this is an anniversary that many did not think the group would be able to celebrate when it was established in 1996," said Standard & Poor's credit analyst Marcus Rivaldi. The Equitas group's opening balance sheet on September 4th 1996 had total liabilities of £15.4 billion. This has reduced to £4.4 billion as of March 31st 2006 – a fall of 71 percent.

Standard & Poor's considers the financial strength of Equitas to be a significant influencing factor on its rating on Lloyd's. The combination of the relatively highly confidence-sensitive nature of the insurance and reinsurance industry business lines and markets on which Lloyd's focuses and Standard & Poor's current view that Equitas is insufficiently capitalised to run-off successfully in some scenarios means there is the potential for Equitas to have a negative impact on Lloyd's by undermining confidence in the Market among, in particular, clients, brokers, and capital providers.