The practical benefits of the recently announced transfer of the Equitas Ltd.'s run-off portfolio initially by a reinsurance deal to United States reinsurance giant Berkshire Hathaway are already being felt by individual syndicates.

Novae's Lloyd's syndicates 1007 and 2147 both yesterday received welcome news from rating agency Moody's which changed the outlook on their A3 financial strength rating to positive.

The agency said that the change in perspective was made because of the improving financial position of the market as a whole, following the recent Equitas deal, its strengthened central resources and the syndicates' own credit position.

The Novae syndicates, both non-marine specialists, were created out of the former SVB business at Lloyd's that suffered persistent reserving problems on discontinued U.S. casualty business.

The group's management reorganized the business and formed a new operation called Novae Group plc that writes United Kingdom commercial lines business through its Financial Services Authority- regulated company NICL and continues at Lloyd's with the syndicates.

The two syndicates will be merged next year to form a single composite operation called syndicate 2007 that will underwrite with £360m ($685 million)of capacity.

Moody's noted the improved outlook of the Novae business as a whole and the syndicate's individually but the main boost for Novae came through the news from Equitas and overall improvement in market financial strength.

The rating agency said that Lloyd's overall aggregate financial position had been steadily improving since 2001, notwithstanding the impact of the 2005 hurricanes, with Central Resources net of expected calls on the Central Fund also steadily improving.

It noted that unencumbered central resources, net of losses from run-off members, are estimated at £1.5 billion or 10% of gross written premiums at the end of last year compared to about 5% of gross written premiums at the end of 2003.

Moody's also said that it viewed the recent announcement of a proposed reinsurance contract for Equitas, under which Lloyd's would contribute up to £90 million as "positive" for Lloyd's.

"This was both from the point of view of reducing (under Phase I of the proposal) and ultimately extinguishing (under Phase II of the proposal) the contingent liability from a failure of Equitas, but also in terms of strengthening Lloyd's franchise," stated the agency.