Moody’s Downgrades Alleghany Lloyd’s Syndicate

October 11, 2001

Moody’s Investors Service downgraded the performance rating of Alleghany Underwriting Ltd.’s Lloyd’s Syndicate 376 form “B-Average” to “C+-Below Average” and kept it under review for a further possible downgrade.

The Syndicate, which is 100 percent supported by by the Alleghany Corporation, reported a $120 million loss last year. It has indicated that its losses from the terrorist attacks in the U.S. would be around $112 million through its Lloyd’s business. (See IJ Website, Oct. 1).

Alleghany is in the process of restructuring its Lloyd’s operations, including Syndicate 367, and Moody’s report indicated that the financial consequences of September 11 were serious enough to put the company’s finances under review. It also said that the outlook should be considered as “short-term.”

Despite the restructuring efforts Moody’s indicated that it felt there was “material uncertainty over the independent trading status of the syndicate going forward and potential impact on its future returns.” As a composite syndicate, which also has exposure to other syndicates losses, and as it’s main business orientation is on the U.S., the rating agency felt it necessary to keep it under review.

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