Best Affirms Ratings of Lloyd’s Syndicate 510 and Kiln Group Limited

A.M. Best Europe – Rating Services Ltd has affirmed the Best’s Syndicate Rating of ‘A’ (Excellent) and the issuer credit rating (ICR) of “a+” of Lloyd’s Syndicate 510, which is managed by R.J. Kiln & Co Ltd. Best also affirmed the ICR of “bbb+” of Kiln Group Limited, the non-operating holding company of R.J. Kiln, and affirmed the debt ratings of “bbb” on the $30 million and $35 million floating rate subordinated bonds issued by Kiln. The outlook for all of the ratings is stable.

The syndicate’s ratings reflect the “financial strength of the Lloyd’s market, which underpins the security of all Lloyd’s syndicates,” said Best. “In addition, syndicate 510 benefits from financial flexibility provided by Tokio Marine Holdings, Inc., the ultimate parent company of the syndicate’s managing agent, R.J. Kiln, and of Kiln Underwriting Limited, which provides 53 percent of the syndicate’s capacity.”

Best also pointed out that the syndicate “benefits from a comprehensive reinsurance program, which includes two long-standing pro rata treaties. A 53 percent share of each of the two treaties is underwritten by Lloyd’s Syndicate 1880, a new syndicate established for the 2009 year of account by Tokio Marine.

“On an annually accounted basis, after the excellent performance in 2009, a weaker performance in 2010 is expected, reflecting generally softening market conditions for the syndicate’s core lines of business and the impact of losses from the Chilean earthquake. On a traditional underwriting year of account basis, a good return on capacity for the 2008 and 2009 years of account is anticipated, in spite of the losses from hurricanes Gustav and Ike in 2008 and the impact of catastrophes in early 2010 on the 2009 result. The results are supported by the syndicate’s robust approach to enterprise risk management, prudent risk appetite and the purchase of effective reinsurance protection.

In addition Best noted that Syndicate 510 has a “strong business profile within the Lloyd’s market as a specialist underwriter in its core areas: short-tail property, marine, political risks, aviation, accident and health and reinsurance. The syndicate writes a diversified account by territory and line of business and leads approximately 55 percent of its business by premium volume. The wide geographical spread of the account is supported by Kiln’s strategy of securing global distribution by acquiring coverholders. Kiln has also opened an office in Paris and appointed a representative in Rio de Janeiro to take advantage of Lloyd’s reinsurance license in Brazil.

Best added that “in accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: http://www.ambest.co.uk/AMBERSDisclosure.pdf.

Source: A.M. Best