Best Affirms Lloyd’s Syndicate 570 & 609 ‘A’ Ratings

A.M. Best Co. has affirmed the Best’s Syndicate Rating of ‘A’ (Excellent) and issuer credit rating of “a+” of Lloyd’s Syndicates 570 and 609, which are both managed by Atrium Underwriters Limited (AUL). The outlook for all of the ratings is stable

Syndicate 570
Best explained that the Syndicate’s financial strength is supported by Bermuda-based Ariel Holdings, Ltd., the ultimate holding company of AUL, in addition to the underlying strength of the Lloyd’s market.

“Capacity for the syndicate’s 2009 year of account is provided by Ariel’s corporate Lloyd’s member, Atrium 5 Limited (25 percent) and third party capital providers, largely traditional Lloyd’s Names (75 percent),” Best explained.

“For the 2010 year of account, the syndicate’s capacity will increase to £145 million [$237 million] (2009: £125 million [$204.5 million]), primarily reflecting the weakening of sterling against the U.S. dollar (the syndicate’s principal trading currency). Atrium 5 Limited’s funds at Lloyd’s requirements for the 2010 year of account are met by letters of credit guaranteed by Ariel and/or Ariel Reinsurance Company Ltd.

“The syndicate writes a well diversified portfolio of property, casualty and accident and health business, which provides some protection against earnings volatility. In 2009, an improvement in the syndicate’s combined ratio is anticipated (2008: 99 percent), supported by stronger rating conditions for property reinsurance business. A solid investment return is likely, albeit lower than the 4 percent achieved in 2008, a result which benefited from total net realized and unrealized gains on investments of £1.2 million [$1.96 million].

“The 2007-09 open years of account are ultimately expected to achieve good returns. The 2006 year closed with an excellent return on capacity of 20 percent, reflecting favorable rating conditions for the syndicate’s property reinsurance account.”

In addition Best pointed out that Syndicate 570 “has a good specialist position within the Lloyd’s market as an underwriter of small to medium-sized commercial business, largely written through U.S. managing general agents (MGAs). Modest growth is expected for the syndicate’s main accident and health business in 2010 (expected to account for approximately 20 percent of gross premiums written). The syndicate is also likely to increase its underwriting of vacant property business through its expanded web-based AU Gold platform.”

Syndicate 609
Syndicate 609’s financial strength is also supported by Ariel Holdings, Ltd. Its capacity is also – Atrium 5 Limited (25 percent) and third party capital providers, largely traditional Lloyd’s Names (75 percent).

The syndicate’s capacity will increase to £275 million [$450 million] for the 2010 year of account (2009: £ 200 million [$327 million]), primarily reflecting the weakening of sterling against the U.S. dollar (the syndicate’s principal trading currency). Atrium 5 Limited’s funds at Lloyd’s requirements for the 2010 year of account are met by letters of credit guaranteed by Ariel and/or Ariel Reinsurance Company Ltd.

Best also, indicated that “rate strengthening for the syndicate’s catastrophe-exposed business is expected to support an improvement in its combined ratio in 2009 from 104 percent in 2008, a result which was impacted by hurricanes Ike and Gustav. A solid net investment yield is anticipated, albeit lower than the 4 percent achieved in “2008 when the syndicate benefited from total net realized and unrealized gains on investments of £1.1 million [$1.8 million].

“The syndicate has a good performance record, which is likely to be maintained when the 2007-09 open years of account close. On a year of account basis, 2006 closed with an excellent return on capacity of 25 percent, reflecting favorable rating conditions for the syndicate’s U.S. property catastrophe business and energy business written in the Gulf of Mexico.

“Syndicate 609 maintains a strong position in the Lloyd’s market, writing a well-diversified portfolio. It has an excellent business profile in certain specialist areas of marine insurance as well as other lines of business, including non-marine property, energy and aviation war business.”

Source: A.M. Best – www.ambest.com