Best Affirms Lloyd’s Syndicate 570 ‘A’ Ratings

A.M. Best Co. announced that it has affirmed the Best’s Syndicate Rating of “A” (Excellent) and the issuer credit rating (ICR) of “a” of Lloyd’s Syndicate 570, which is managed by Atrium Underwriters Ltd (AUL). The outlook for both ratings remains positive.

In a separate bulletin Best affirmed the “A” ratings of Lloyd’s Syndicate 609, which is also managed by Atrium (See previous article).

“The syndicate benefits from the financial strength of the Lloyd’s market, which underpins the security of all Lloyd’s syndicates,” said the bulletin. “The rating is based on A.M. Best’s specific syndicate criteria. (See A.M. Best’s Rating Methodology for Lloyd’s Syndicates at: http://www.europe.ambest.com/lloydsmethodology.pdf.)”

Best’s report noted that the “syndicate has an excellent market profile as a specialist underwriter of small to medium-sized commercial business predominantly in the United States (including professional indemnity and property insurance), giving it a lower risk profile than many other Lloyd’s syndicates.” Best also said it “believes the syndicate is committed to managing the volume of business written across the insurance cycle in order to maintain profitability. In 2005, gross premium income is likely to be broadly stable. An offsetting factor is the syndicate’s modest size (allocated capacity of £165 million [$312.5 million] in 2004) compared to its main competitors.”

Explaining the positive outlook, Best said it reflects the rating agency’s opinion that prospective financial performance will be strong. Best said it “believes syndicate 570 will produce solid operating profits of between 10 to 15 percent of capacity (after personal expenses) when the 2002 and 2003 years of account are closed, with the syndicate benefiting from positive market conditions and a relative absence of significant losses.

“Further ahead, A.M. Best anticipates a continuation of this strong performance in 2004 and 2005, with a return on capacity of just above 10 percent likely in each year. This factors a relatively small loss to the syndicate from the series of major catastrophes in the second half of 2004. In 2004, on an annually accounted basis, A.M. Best believes a combined ratio of approximately 90 percent is likely, including any potential impact of major catastrophes in the second half of 2004 to date.”

Topics Excess Surplus AM Best Lloyd's