A.M. Best Affirms Ratings of Lloyd’s Syndicate 2010

LONDON--()--A.M. Best has affirmed the financial strength rating (FSR) of A (Excellent) and the issuer credit rating (ICR) of "a+" of Lloyd’s Syndicate 2010 (United Kingdom). The outlook for the ratings remains positive.

The syndicate’s ratings and outlook primarily reflect the financial strength of the Lloyd's market, which underpins the security of all Lloyd’s syndicates. In addition, the syndicate has a strong performance track record.

The syndicate is managed by Cathedral Underwriting Limited, and 58% of its capacity is supported by the Cathedral group’s corporate member, Cathedral Capital (1998) Limited, with the remainder supported by third party names. The Cathedral group of companies was acquired by Lancashire Holdings Limited in November 2013.

The syndicate’s strong performance track record is demonstrated by a five-year average combined ratio of 85% (2009-13) on an annually accounted basis. Prospective performance is subject to volatility from catastrophe losses. However, the syndicate’s results proved resilient in 2010 and 2011, which were years of above average catastrophe activity, with combined ratios of 96% and 108%, respectively. The 2013 annually accounted result was excellent, with a profit before tax of GBP 70.6 million and a combined ratio of just 66%.

Partly offsetting these positive rating factors is the syndicate’s high dependence on the on-going support of its reinsurers due to the significant catastrophe exposure in its relatively concentrated book of business. Syndicate 2010 writes a specialist portfolio of non-marine reinsurance, direct and facultative property insurance and aviation reinsurance. Smaller accounts of contingency and satellite insurance are also written. The syndicate’s extensive reinsurance programme helps mitigate the potential for volatile earnings that arises from its catastrophe exposure; however, the syndicate remains dependent on placing this programme each year.

A factor that may lead to positive or negative rating actions for the syndicate is a change in the ratings of Lloyd's, which currently has an FSR of A (Excellent) and an ICR of “a+”, both with a positive outlook.

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. 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.

This rating announcement has been issued by A.M. Best Europe – Rating Services Limited, which is a subsidiary of A.M. Best Company. 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 © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

Contacts

A.M. Best
Mathilde Jakobsen, +(44) 20 7397 0266
Associate Director, Analytics
mathilde.jakobsen@ambest.com
or
Catherine Thomas, +(44) 20 7397 0281
Director, Analytics
catherine.thomas@ambest.com
or
Jim Peavy, +(1) 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com

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Contacts

A.M. Best
Mathilde Jakobsen, +(44) 20 7397 0266
Associate Director, Analytics
mathilde.jakobsen@ambest.com
or
Catherine Thomas, +(44) 20 7397 0281
Director, Analytics
catherine.thomas@ambest.com
or
Jim Peavy, +(1) 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com