Best Affirms Lloyd’s Syndicate 1225 (AEGIS) ‘A’ Rating; Stable Outlook

A.M. Best Co. has affirmed the Best’s Syndicate Rating of ‘A’ (Excellent) and issuer credit rating of “a+” of Lloyd’s Syndicate 1225, which is managed by AEGIS Managing Agency Limited , both with stable outlooks.

Best pointed out that the ratings of syndicate 1225 reflect the financial strength of Lloyd’s of London, “which underpins the security of all syndicates. The syndicate benefits from its association with Associated Electric & Gas Insurance Services Limited (AEGIS), which provides part of the assets that back the syndicate’s funds at Lloyd’s.”

Best also noted that the syndicate’s prospective earnings “remain subject to volatility due to exposure to catastrophe losses.” However, Best also indicated that the syndicate “continues to take measures to mitigate this volatility, including diversifying into less catastrophe-exposed lines and reducing exposure to natural catastrophes in peak zones such as the Gulf of Mexico region.”

For 2010, the syndicate is likely to return a “combined ratio of 95 percent-100 percent,” best continued. “This represents a deterioration from the previous year’s combined ratio of 92 percent and reflects the expectation that 2009’s favorable loss experience will not be replicated in 2010. The expected combined ratio takes into account the syndicate’s estimated loss from the Deepwater Horizon oil rig explosion.

“In 2009, the syndicate achieved a better than expected pre-tax profit of £52 million [$75 million], benefitting from benign loss experience and a strong investment return with particular good performance achieved by the equity and high yield fixed income portfolios.

“Syndicate 1225 has a good business profile in its energy and utility lines, assisted by its association with AEGIS. The syndicate has a strategy to improve the diversification of its account and has reported strong growth in particular in its non-marine property account. New lines added since 2008 include contingency, leisure, A&H and property treaty reinsurance.”

Source: A.M. Best