Best Affirms Ratings on Lloyd’s Syndicates 570, 609 and 382

December 19, 2003

A.M. Best Co. announced that it has affirmed the ‘A-‘ (Excellent) rating of Lloyd’s Syndicate 570 and the ‘A’ (Excellent) ratings of Syndicates 609 and 382.

Syndicate 570 is managed by Atrium Underwriters Limited. Best said the outlook was positive and that the rating was based on “the syndicate’s excellent business profile and prospective financial 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.”

Best observed that syndicate 570 “avoids growth when market conditions are weak. This is reflected in an unchanged allocated capacity of approximately GBP 50 million (USD 87.5 million) between 1997 and 2000. A.M. Best expects this strategy to continue and believes that it strengthens the syndicate’s market position in the long term.”

Best assigned a stable outlook to Syndicate 609, which is also managed by Atrium, and noted its sound financial performance and the Lloyd’s security backup. It noted, however that, “a partially offsetting factor is the syndicate’s modest market position compared with larger competitors.”

The rating agency said it expected the syndicate “to record excellent results when the 2001 to 2003 years are closed, continuing a consistent record of profitability since its inception in 1984. The syndicate’s projected return of 3 percent of capacity for the 2001-year of account (Syndicate Quarterly Returns at September 2003) is likely to be achieved, despite the inclusion of losses relating to the World Trade Center and the terrorist attacks on the airport at Colombo, Sri Lanka.” It expects syndicate 609 to “continue to place it in Lloyd’s upper quartile.”

Syndicate 382, managed by Hardy (Underwriting Agencies) Ltd., also has a stable outlook and the rating reflects its “excellent current and prospective underwriting performance and business profile,” in addition to the Lloyd’s back up. Partially offsetting factors include “recent rapid capacity expansion and the risks associated with underwriting a new class of business.

Best said it “expects syndicate 382 to record excellent profits when the 2001-2003 open years of account are closed,” and to continue “to be profitable in 2004 as a result of disciplined underwriting and favourable market conditions.” The report noted that the “syndicate has a long record of strong underwriting performance, having consistently outperformed the Lloyd’s market over the last 20 years.”

The rating agency also said “Syndicate 382 has an excellent market profile for many of the short-tail classes in which it specialises. It is a leader in many of its business lines, particularly certain aviation classes, which enables the syndicate to determine pricing and underwriting terms. The syndicate plans to begin underwriting financial institutions in 2004, which is expected to comprise 17 percent of gross premiums for the year.”

Explaining its concerns over the rapid capacity expansion, Best said it “expects that recent enhancement of the syndicate’s management will facilitate the handling of higher premium volumes. The syndicate has approval for a pre-emption of 15 percent for 2004, which will raise capacity to GBP 115 million (USD 201.8 million), an increase of 213 percent since 2002.”

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