Best Affirms ‘A’ Rating of Lloyd’s Syndicate 958

December 10, 2003

A.M. Best Co. announced that it has affirmed its Syndicate Rating of ‘A’ (Excellent) on Lloyd’s Syndicate 958, which is managed by Omega Underwriting Agents Ltd, with a stable outlook.

“The rating reflects the financial strength of the Lloyd’s market, currently rated ‘A-‘ (Excellent), which underpins the security of all Lloyd’s syndicates, in addition to syndicate 958’s excellent and improving underwriting profitability and excellent business profile,” said Best. “An offsetting factor is the continued expansion of the syndicate in an increasingly competitive environment.”

The bulletin noted that “Syndicate 958 forecasts a return on capacity for the 2001 and 2002 years of account of 2.5 percent and 15 percent, respectively, according to third quarter syndicate quarterly returns (SQRs), following a return on capacity of 2.88 percent for the 2000 closed year of account. This constitutes top quartile performance (within Lloyd’s) and is expected to continue when the market softens. Strong underwriting and a conservative approach to investments, reserving and reinsurance will continue to provide comprehensive protection to the syndicate’s funds.”

Best also commented on Syndicate 958’s excellent business profile, noting that it “benefits from long-term relationships with clients, brokers and reinsurers.” It also “writes a well diversified account, specialising in small – to medium-sized property risks written in the excess and surplus lines market in the United States,” where it earns over 60 percent of its gross premium.

“Prospectively, the syndicate’s risk profile will improve through increased diversity from a complementary book of continental European business to be written in 2004 by a specialist team recruited from Europa Re,” said Best.

It also noted that the “syndicate has recently agreed a pre-emption for the 2004 year of account to raise capacity by almost 50 percent to GBP 225 million (USD 390 million). This follows growth from capacity of GBP 51 million (USD 88 million) for the 1999 year of account.”

A.M. Best said it believes “that continued expansion of the syndicate’s existing core lines of business in an increasingly competitive environment may place pressure on terms and rates. However, syndicate 958 is expected to scale back on underwriting once conditions deteriorate as evidenced in its policy through the last down cycle.”

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