Best Affirms Amlin Plc, Lloyd’s Syndicate 2001 Ratings

A.M. Best Co. announced that it has affirmed its Syndicate Rating of “A” (Excellent) and issuer credit rating (ICR) of “a+” of Lloyd’s Syndicate 2001, managed by Amlin Underwriting Limited (AUL). Best also affirmed the ICR of “bbb+” of Amlin plc, the non-operating holding company of the Amlin group of companies, and the debt rating of “bbb” on the $50 million subordinated notes due in 2019, issued by Amlin. In addition, Best said it has assigned a “bbb” rating to the $50 million subordinated notes due in 2020, issued by Amlin. The outlook for all ratings remains stable.

“In addition to benefiting from the financial strength of the Lloyd’s market, which underpins the security of all Lloyd’s syndicates, A.M. Best believes syndicate 2001’s financial strength is enhanced by maintaining Funds at Lloyd’s at the default rate of 40 percent, which is above the syndicate’s Lloyd’s adjusted risk-based capital rate of 38.4 percent,” said the announcement.

In addition Best said it “believes Amlin has the capability to raise additional funds should the syndicate require support. Syndicate 2001 continues to be the largest syndicate by capacity at Lloyd’s with allocated capacity of £ 850 million ($1.505 billion) in 2005, which will increase to £1 billion ($1.77 billion) for the 2006 year of account, in anticipation of a hardening market following the 2005 hurricanes in the United States.”

Best indicated that it “projects profitable performance in each of the 2003 – 2005 underwriting years, despite estimated losses of $133 million net from the U.S., Caribbean and Japanese windstorms in the second half of 2004 and $197 million net from the U.S. hurricanes in 2005.” The rating agency expects profits to be in the 22 to 25 percent range “on capacity (after personal expenses) for the 2003 year of account as a result of a benign year for losses, a positive rating environment and the release of significant prior year reserves (in line with the syndicate’s September 2005 Quarterly Monitoring Return).”

Best said it “forecasts continued excellent performance, with a profit above 7.5 percent in 2004 and above 4 percent in 2005, despite the impact of catastrophe experience across this period.”

The report added that in Best’s opinion, “syndicate 2001 has an excellent market profile and leadership position (leading approximately 55 percent of business by premium volume) in most of the classes it writes. The syndicate’s account is well diversified geographically, with business written across four main divisions (Non-Marine, Amlin Insurance Services, Marine and Aviation), all of which benefit from strong brands within their respective markets. A.M. Best believes the syndicate continues to maintain a strong internal risk management and control infrastructure.”