Standard & Poor’s assigned its single-‘A’ counterparty credit and insurer financial strength ratings to U.K.-based Wellington Reinsurance Ltd; while A.M. Best rated the London based reinsurer A (Excellent).
The company was established by Wellington Underwriting plc, which owns 46.3% of the 2002 capacity of Lloyd’s syndicate 2020, with initial capital of £ 230 ($346.5 million) and an irrevocable commitment for at least an additional £ 167 million ($251.6 million) to be fully drawn down by 30 November 2002.
“The ratings reflect the new company’s strong and largely established business position, very strong earnings prospects, proven management team and control structure, and extremely strong capital base,” stated Marcus Rivaldi, an associate at S&P’s Financial Services Group in London.
He indicated that “These factors are offset by the potential operational volatility and cyclicality inherent in the classes of business that Wellington Re is focusing on, its high reliance on reinsurance, and the nature of its investor base.”
Best’s bulletin cited the company’s “Excellent expected financial performance,” and stated that “Wellington Re’s prospective book of business, originally underwritten at Lloyd’s syndicate 2020, has an excellent underwriting track record. Syndicate 2020 has consistently returned excellent underwriting results in this book, particularly on property catastrophe, as a result of a strict underwriting and business selection criteria. The same approach is to be adopted by Wellington Re. A.M. Best expects a continuation of this performance, subject to normal loss experience.”
S&P described Wellington Re as “a start-up London Market insurer and reinsurer, backed principally by venture capital and concentrating on U.S. property and international casualty business sourced predominantly from the London broker network.
The investors in the company which was spun off from the Lloyd’s-based Wellington group, include Berkshire Hathaway. It forecasts gross premiums of approximately $350 million in 2002. A principal activity will be to provide quota share reinsurance to the new Berkshire Hathaway supported syndicate that is managed by Wellington Underwriting Agency.
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