Best Affirms Amlin’s Lloyd’s Syndicate 2001 ‘A’, ‘a+’ Ratings

A.M. Best Co. has affirmed its Syndicate Rating of “A” (Excellent) and issuer credit rating (ICR) of “a+” of Lloyd’s Syndicate 2001, which is managed by Amlin Underwriting Limited (AUL). Best also affirmed the ICR of “bbb+” of Amlin plc, the UK-based, the non-operating holding company of the Amlin group of companies, and the debt rating of “bbb” on the fixed-to-floating rate subordinated notes issued by Amlin as follows: $50 million due in 2019, $50 million due in 2020 and £230 million ($450 million) due in 2026. The outlook for all ratings remains stable.

In a separate bulletin (See previous article) Best also affirmed Amlin Bermuda’s “A-” rating

Best said it “believes that the syndicate’s financial strength is enhanced by holding funds at Lloyd’s (FAL) at the default rate of 40 percent, which is above the Lloyd’s economic capital assessment rate of 38.4 percent for the syndicate. The syndicate’s relatively low FAL requirement reflects the diversified nature of this composite account. Additionally, the syndicate’s financial flexibility is enhanced by continued support provided by its parent, Amlin. Syndicate 2001 is amongst the largest syndicates at Lloyd’s and has an allocated capacity of £1 billion ($2 billion) in 2006, which is expected to remain unchanged in 2007.”

The rating agency also foresees an “excellent performance in each of the 2004 – 2006 underwriting years.” Despite Amlin’s “significant catastrophe losses during 2004 and 2005,” Best is forecasting “an excellent return of approximately 16 percent and 5 percent on capacity (after personal expenses) for those years of account respectively.” It also expects continued excellent performance” in 2006, with a likely “return above 15 percent.” Best also pointed out that the “performance in 2006 is supported by the upturn in rates in catastrophe affected regions, reduced reinsurance purchase and a benign catastrophe season.”

Syndicate 2001 also enjoys “an excellent market profile,” said best, “which is demonstrated by its leadership position in most classes it writes. The syndicate leads approximately 45 percent of its business by premium volume.” Its account is well diversified both by line of business and territory, and best said it “believes the syndicate continues to maintain a strong internal risk management and control infrastructure that is fully integrated across the group’s operations.”