Best Affirms FSR for Lloyd’s Syndicate 1084; Outlook Stable

July 13, 2005

A.M. Best Co. has affirmed the Best’s Syndicate Rating of A (Excellent) and the issuer credit rating (ICR) of “a” of Lloyd’s Syndicate 1084 (United Kingdom).

At the same time, A.M. Best has affirmed the ICR of “bbb-” of Chaucer Holdings Plc (United Kingdom), the ultimate parent company of the syndicate’s managing agency, Chaucer Syndicates Limited (CSL). The “bb+” rating of the GBP 20 million subordinated convertible 8.5% 2008 loan stock of Chaucer Holdings Plc has also been affirmed. The outlook for all ratings remains stable.

The syndicate’s ratings reflect its excellent business profile and very good prospective operating performance. Additionally, the syndicate benefits from the financial strength of the Lloyd’s market rating, which underpins the security of all Lloyd’s syndicates.

A.M. Best believes the syndicate has an excellent business profile within Lloyd’s, writing a well-diversified portfolio, both in terms of the territories and classes of business written. The syndicate has six underwriting divisions that write an international account in the United Kingdom, continental Europe, Asia, Australasia and North America. A.M. Best believes that the syndicate’s profile is also supported by its leadership position on a substantial proportion of its business (anticipated 20% of 2005 gross premium income).

A.M. Best anticipates a profit on capacity, after personal expenses, of approximately 12% for the 2003 underwriting year and 10% for 2004, in line with the syndicate’s first quarter 2005 Quarterly Monitoring Return. In 2005, A.M. Best believes a similar profit of approximately 10% of its GBP 400 million (USD 720 million) capacity is likely, reflecting the syndicate’s active management of the quality of business written in a softening market.

For 2005 renewals, it is anticipated that the syndicate will reallocate capacity away from classes of business experiencing high rate reductions, such as airlines. A.M. Best anticipates a continuation of this process as the market softens further.

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