A.M. Best Affirms Ratings of Lloyd’s Syndicates 623 and 2623

October 15, 2003

A.M. Best Co. has affirmed the financial strength ratings of A (Excellent) of Lloyd’s syndicates 623 and 2623, which underwrite in parallel. The outlook on both ratings is stable.

The ratings reflect both syndicates’ excellent market profile and operating 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. The rating is based on A.M. Best’s specific syndicate criteria (see A.M. Best’s rating methodology for Lloyd’s syndicates at www.ambest.com). A partially offsetting factor is the challenges presented to management by the significant premium growth anticipated in 2003 and 2004.

The two syndicates are managed by Beazley Furlonge Ltd and underwrite business at Lloyd’s in parallel with premium income split proportionately between the syndicates in line with total capacity (GBP 330 million (USD 546.5 million) capacity for each syndicate in 2003). Syndicate 623 is supported by third-party capital providers while syndicate 2623, which was established at the end of 2002, is backed by the group’s own Lloyd’s corporate capital provider, Beazley Underwriting Limited.

Excellent market profile – The syndicates lead more than 50 percent of business written and have an excellent profile particularly in professional liability, a class in which syndicate 623 has specialised since it commenced trading in 1986. The account is written in four main divisions: specialty lines, property, reinsurance and marine.

Excellent operating performance – Syndicate 623 has consistently reported operating profits above the Lloyd’s market average since its inception in 1986, and A.M. Best expects this to continue when the 2002 and 2003 years of account are closed. A.M. Best expects a breakeven result in 2001, a result likely to be in the top quartile of the Lloyd’s market, despite a projected World Trade Center loss of GBP 100 million gross (USD 165.6 million) and GBP 20 million (USD 33.1 million) net. Syndicate 2623 will report identical underwriting results to syndicate 623 from 2003 onwards.

Significant premium growth – Gross premium in 2003 is expected to have grown by approximately 210% over the 2000 year to around GBP 600 million (USD 994 million) as a result of rate increases, larger lines and new business acquisition. A.M. Best estimates that premium capacity will rise to approximately GBP 700 – 750 million (USD 1.16 – 1.24 billion) in 2004.