A.M. Best Affirms Ratings of Lloyd’s Syndicate 570

A.M. Best Co. has affirmed the Best's Syndicate Rating of A (Excellent) and issuer credit rating of "a+" of Lloyd's Syndicate 570 (United Kingdom), which is managed by Atrium Underwriters Limited (AUL). The outlook for both ratings remains stable.

Syndicate 570's financial strength is supported by Ariel Holdings, Ltd. (Ariel) (Bermuda), 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%) and third party capital providers, largely traditional Lloyd's Names (75%). For the 2010 year of account, the syndicate's capacity will increase to GBP 145 million (2009: GBP 125 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%), supported by stronger rating conditions for property reinsurance business. A solid investment return is likely, albeit lower than the 4% achieved in 2008, a result which benefited from total net realised and unrealised gains on investments of GBP 1.2 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%, reflecting favourable rating conditions for the syndicate's property reinsurance account.

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% 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.

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