LONDON--(BUSINESS WIRE)--A.M. Best Europe – Rating Services Limited has affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit rating (ICR) of “a+” of Lloyd’s Syndicate 382 (United Kingdom), which is managed by Hardy (Underwriting Agencies) Ltd (HUA). A.M. Best has also affirmed the ICRs of “bbb” of Hardy Underwriting Bermuda Limited (Hardy Bermuda) (Bermuda), the ultimate holding company of the Hardy group of companies, and Hardy Underwriting Group plc (Hardy Group) (United Kingdom), the immediate holding company of HUA. In addition, A.M. Best has affirmed the debt rating of “bbb-” on the USD 30 million floating rate subordinated bonds issued by Hardy Group. The outlook for all ratings remains stable. Concurrently, A.M. Best has withdrawn the ratings at the company’s request and assigned an NR-4 (Company Request) to the FSR and an “nr” to the ICRs, as well as the debt.
The ratings of syndicate 382 reflect the financial strength of the Lloyd’s market, which underpins the security of all Lloyd’s syndicates. In addition, the syndicate’s financial flexibility continues to benefit from the support of Hardy Bermuda, which provides 92.5% of its capacity for the 2011 year of account. The remaining 7.5% of capacity is provided by Arab Insurance Group (B.S.C.). Hardy Bermuda’s funds at Lloyd’s requirements for 2011 are met by partial utilisation of its USD 82 million letter of credit facility.
Hardy Bermuda is expected to maintain solid risk-adjusted capitalisation. This is in spite of the planned share buy back of up to 2.7 million common shares that was announced in December 2010 and above average catastrophe losses in the first quarter of 2011, which include an estimated net loss of between GBP 9 million and GBP 12 million from the Japanese earthquake and tsunami. The group’s earnings, which are driven by the performance of syndicate 382, deteriorated in 2010, largely due to a net loss of GBP 37.2 million attributable to the Chilean and New Zealand earthquakes and the hailstorms in Australia. The catastrophe losses emanated primarily from the property treaty account, which focuses on non-U.S. business. Strong underwriting performance from the group’s non-catastrophe-exposed accounts supported a pre-tax profit of GBP 10.0 million (2009: GBP 20.1 million).
The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilised include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding Universal BCAR”; “Understanding BCAR for Property/Casualty Insurers”; and “Rating Lloyd’s Syndicates”. Methodologies 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.
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