LONDON--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of A (Excellent) and the issuer credit rating of “a+” of Lloyd’s Syndicate 2010 (Syndicate 2010) (United Kingdom). The outlook for each rating remains stable.
The rating affirmations of Syndicate 2010 primarily reflect the financial strength of the Lloyd’s market, which underpins the security of all Lloyd’s syndicates. In addition, the ratings factor in the syndicate’s specialist business profile and track record of producing strong underwriting results.
Syndicate 2010 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.
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.
The syndicate’s strong performance track record is demonstrated by a five-year average combined ratio of 80% (2011-2015) 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 2015 annually accounted result was strong, with a profit before tax of USD 78 million and a combined ratio of 68%.
Syndicate 2010 has a lead position in several business lines, which enhances its control over pricing and risk selection. However, prospective growth and performance could be negatively affected by the soft rates currently prevailing in the reinsurance markets.
The syndicate experienced significant senior management and underwriting staff turnover during the first half of 2016 and has since made a number of appointments to replace key positions. A.M. Best will continue to monitor the progress of the syndicate’s recruiting process and evaluate any implications for the syndicate’s business profile and performance.
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