Best Affirms ‘A’ Ratings of Lloyd’s Beazley Syndicates

October 15, 2003

A.M. Best Co. announced that it has affirmed the financial strength ratings of A (Excellent) of Lloyd’s syndicates 623 and 2623, both managed by Beazley Furlonge Ltd., with a “stable” outlook.

The two syndicates underwrite business at Lloyd’s in parallel with premium income split proportionately between them. Total capacity for each syndicate is £330 million ($546 million). Best noted that “Syndicate 623 is supported by third-party capital providers while syndicate 2623, which was established at the end of 2002, is backed by the group’s own Lloyd’s corporate capital provider, Beazley Underwriting Limited.”

Best indicated that, “the ratings reflect both syndicates’ excellent market profile and operating performance, in addition to the financial strength of the Lloyd’s market–currently rated A- (Excellent)–which underpins the security of all Lloyd’s syndicates. The rating is based on A.M. Best’s specific syndicate criteria (see A.M. Best’s rating methodology for Lloyd’s syndicates at A partially offsetting factor is the challenges presented to management by the significant premium growth anticipated in 2003 and 2004.”

The bulletin also noted: “The syndicates lead more than 50% of business written and have an excellent profile particularly in professional liability, a class in which syndicate 623 has specialised since it commenced trading in 1986. The account is written in four main divisions: specialty lines, property, reinsurance and marine.

“Syndicate 623 has consistently reported operating profits above the Lloyd’s market average since its inception in 1986, and A.M. Best expects this to continue when the 2002 and 2003 years of account are closed. A.M. Best expects a breakeven result in 2001, a result likely to be in the top quartile of the Lloyd’s market, despite a projected World Trade Center loss of GBP 100 million gross (USD 165.6 million) and GBP 20 million (USD 33.1 million) net. Syndicate 2623 will report identical underwriting results to syndicate 623 from 2003 onwards.”

Best said it expects gross premium in 2003 to increase by “approximately 210% over the 2000 year to around GBP 600 million (USD 994 million) as a result of rate increases, larger lines and new business acquisition.” It also forecast that “premium capacity will rise to approximately GBP 700 – 750 million (USD 1.16 – 1.24 billion) in 2004.”

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