A.M. Best Affirms Ratings of Lloyd’s Syndicate 510

LONDON--(BUSINESS WIRE)-- A.M. Best Europe – Rating Services Limited has affirmed the financial strength rating of A (Excellent) and issuer credit rating of “a+” of Lloyd’s Syndicate 510 (United Kingdom), which is managed by R.J. Kiln & Co Limited (R.J. Kiln). The outlook for both 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. In addition, syndicate 510 benefits from the financial flexibility provided by Tokio Marine Holdings, Inc. (Tokio Marine), the ultimate parent company of R.J. Kiln and Kiln Underwriting Limited, which provides 55% of the syndicate’s capacity. Additionally, the syndicate benefits from a comprehensive reinsurance programme, which includes two long-standing pro rata treaties. A 55% share of each of the two treaties is underwritten by Lloyd’s Syndicate 1880, a syndicate established by Tokio Marine.

On an annually accounted basis, syndicate 510 is expected to report a solid pre-tax profit in 2012, a significant improvement on the loss of <money>GBP 15.6 million reported for 2011. A combined ratio of approximately 90% is expected (2011: 102.6%), subject to normal catastrophe activity in the remainder of the year. Investment income from the syndicate’s conservative investment portfolio is likely to be modest due to low interest rates.

On a traditional underwriting year of account basis, the 2010 year of account is expected to breakeven. The result will be adversely affected by losses from catastrophic events during 2010, including the earthquakes in Chile and New Zealand and the Australian floods, as well as major catastrophe losses in 2011. A small positive return on capacity is anticipated for the 2011 year of account. The 2009 year of account closed with a solid return on capacity of 19%, despite being adversely affected by major losses, including Deepwater Horizon and the earthquake in Chile.

Syndicate 510 has a strong business profile within the Lloyd’s market and leads approximately 55% of its business by premium volume. It writes a diversified account by territory and line of business, comprising short-tail property and marine, political, aviation, accident and health and reinsurance risks. The wide geographical spread of the account is supported by R.J. Kiln’s strategy of developing long-term relationships with coverholders. For the 2012 year of account, Lloyd’s Syndicate 807, which is also managed by R.J. Kiln, has been merged with syndicate 510. Syndicate 807 remains responsible for the ongoing service of risks written into the 2011 and prior years of account. Growth in 2012 is expected to be driven by the merger of syndicate 807, which is expected to provide the syndicate with a larger share of existing risks, as well as rate increases in loss affected classes and other classes where market conditions are favourable.

A factor that may lead to positive or negative rating actions for syndicate 510 is a change in the ratings of the Lloyd’s market.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilised include: “Rating Lloyd’s Syndicates” and “Rating Members of Insurance Groups”. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.

A.M. Best Europe – Rating Services Limited is a subsidiary of A.M. Best Company.Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2012 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.

A.M. Best Co.
Reza Pakravan,+(44) 20-7397-0293
Financial Analyst
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Catherine Thomas,+(44) 20-7397-0281
Director, Analytics
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or
Rachelle Morrow, +(1) 908-439-2200, ext. 5378
Senior Manager, Public Relations
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Jim Peavy, +(1) 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
[email protected]

Source: A.M. Best Co.