Best Affirms FSR for Lloyd’s Syndicate 958; Outlook Remains Stable

A.M. Best Co. has affirmed the Best’s Syndicate Rating of A (Excellent) and the issuer credit rating of “a+” of Lloyd’s Syndicate 958 (United Kingdom). The outlook for both ratings remains stable.

The ratings reflect syndicate 958’s excellent operating performance and distinctive profile in certain specialist markets, as well as the financial strength of the Lloyd’s market, which underpins the security of all Lloyd’s syndicates.

The syndicate is managed by Omega Underwriting Agents Limited (OUAL), a wholly-owned subsidiary of Omega Underwriting Holdings PLC, which is listed on the Alternative Investment Market of the London Stock Exchange.

A.M. Best believes that syndicate 958 is likely to continue to perform strongly across the cycle, supported by its focus on lower volatility risks, prudent reserving and conservative reinsurance buying.

A.M. Best anticipates a return on capacity (after personal expenses) of 13% and 8%, respectively, for the 2003 and 2004 open years of account (in line with the syndicate’s September 2005 Quarterly Monitoring Return). The unprecedented U.S. hurricane season of 2005 is likely to have a net impact of approximately 10% of capacity on the syndicate’s result for the 2005 year of account, although A.M. Best believes the syndicate is still likely to produce a profit overall. However, the syndicate is likely to generate strong earnings in 2006 as a result of anticipated favourable market conditions for its main lines of business.

Syndicate 958 has a distinctive business position as a specialist underwriter of small to medium-sized property business, mainly emanating from the United States (more than 50% of gross premiums anticipated in 2006). Gross premiums written were equally split between direct insurance and reinsurance in 2005, and this is unlikely to change significantly in 2006. Capacity remained stable for the 2005 year of account at GBP 225 million (USD 397.3 million) and is GBP 250 million (USD 441.4 million) for 2006 in anticipation of hardening of rates for some of the classes written by the syndicate.

A.M. Best believes the syndicate will scale back on underwriting once conditions deteriorate, in line with its approach in previous down cycles.