A.M. Best Europe – Rating Services Limited has affirmed the financial strength rating (FSR) of ‘A’ (Excellent) and issuer credit rating (ICR) of “a+” of Lloyd’s Syndicate 382, which is managed by Hardy Underwriting Agencies (HUA). Best has also affirmed the ICRs of “bbb” of Hardy Underwriting Bermuda Limited, the ultimate holding company of the Hardy group of companies, and the UK-based Hardy Underwriting Group plc, the immediate holding company of HUA. In addition Best has affirmed the debt rating of “bbb-” on the $30 million floating rate subordinated bonds issued by Hardy Group. The outlook for all ratings remains stable. At the same time Best withdrew the ratings at the company’s request and assigned an NR-4 (Company Request) to the FSR and an “nr” to the ICRs, as well as the debt. Best explained that the ratings of syndicate 382 “reflect the financial strength of the Lloyd’s market, which underpins the security of all Lloyd’s syndicates. In addition, the syndicate’s financial flexibility continues to benefit from the support of Hardy Bermuda, which provides 92.5 percent of its capacity for the 2011 year of account. The remaining 7.5 percent of capacity is provided by Arab Insurance Group (B.S.C.). Hardy Bermuda’s funds at Lloyd’s requirements for 2011 are met by partial utilization of its $82 million letter of credit facility.” Best also, indicated that it expects Hardy Bermuda “to maintain solid risk-adjusted capitalization. This is in spite of the planned share buyback of up to 2.7 million common shares that was announced in December 2010 and above average catastrophe losses in the first quarter of 2011, which include an estimated net loss of between £9 million and £12 million [$14.7 million and $19.6 million] from the Japanese earthquake and tsunami. The group’s earnings, which are driven by the performance of syndicate 382, deteriorated in 2010, largely due to a net loss of £37.2 million [$60.76 million] attributable to the Chilean and New Zealand earthquakes and the hailstorms in Australia. The catastrophe losses emanated primarily from the property treaty account, which focuses on non-U.S. business.” However, Best also indicated that a “strong underwriting performance from the group’s non-catastrophe-exposed accounts supported a pre-tax profit of £10.0 million [16.33 million],” compared to £20.1 million [32.83 million] in 2009.
A.M. Best Europe – Rating Services Limited has assigned a financial strength rating of ‘A’ (Excellent) and issuer credit rating of “a” to UK-based Samsung Fire & Marine Insurance Company of Europe Limited, both with stable outlooks. SFME is a new UK subsidiary of South Korean insurer Samsung Fire & Marine Insurance Co., Ltd. (SFM). It was authorized by the UK Financial Services Authority on 29 March 2011 to write general insurance business. “SFME’s risk-adjusted capitalization is likely to be maintained at an excellent level as a result of SFM’s strong financial support,” said Best. “SFME has been initially capitalized with £10.6 million [$17.3 million] of common shareholders’ equity, which has been provided by SFM. Moreover, SFM will provide SFME with a substantial level of reinsurance protection, predominantly on a facultative basis but also through participation on a surplus treaty.” Best also noted that while SFME’s risk-adjusted capitalization is expected to remain excellent, it “is likely to reduce after 2012, when a higher amount of business is expected to be retained. The business to be written by SFME, predominantly marine cargo and property, has been written by SFM through a number of fronting arrangements with third party insurers for several years,” Best continued. “The projections for the first five years’ trading by SFME are a continuation of the growth pattern since 2005 of SFM’s business in Europe in terms of gross written premiums, with a loss ratio within a similar range anticipated. Operating performance in 2011 is expected to be negatively affected by initial start-up costs, but a solid operating performance is likely from 2012.” In addition Best said it would monitor “SFME’s quarterly performance against its operating plan. Initially, SFME will operate as a captive insuring such risks as manufacturing plant and machinery and logistics on behalf of the larger Samsung group. Expansion is anticipated firstly by insuring other Korean companies within Europe and then by writing other European commercial business. As a subsidiary of SFM, SFME is likely to have an excellent business profile within its target market in Europe.”
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