Best Affirms Beazley Group plc, Lloyd’s Syndicates 623/2623 Ratings
A.M. Best Co. announced that it has affirmed its Syndicate Rating of “A” (Excellent) and the issuer credit rating (ICR) of “a+” of Lloyd’s Syndicate 623 and Lloyd’s Syndicate 2623 (collectively referred to as syndicate 623/2623), which are both managed by Beazley Furlonge Limited. Best also affirmed the ICR of “bbb+” of the U.K. based Beazley Group Plc, the non-operating holding company of the Beazley group of companies, and the debt rating of “bbb-” on the $18 million floating rate subordinated notes due 2034 issued by Beazley. The outlook for all the ratings remains stable.
Best noted: “Syndicates 623 and 2623 underwrite business at Lloyd’s in parallel, with premium income split in line with total capacity of £220 million ($385 million) and £522 million ($914 million) respectively in 2005. Syndicate 623 is supported by third-party capital providers, while syndicate 2623 is backed by Beazley’s own Lloyd’s corporate capital provider, Beazley Underwriting Limited (BUL).
“The ratings reflect the financial flexibility provided to syndicate 623/2623 by Beazley, a publicly listed company. BUL will increase its participation on syndicate 623/2623 to 78 percent of the combined capacity in 2006, up from 70 percent in 2005. This will be supported by a letter of credit facility for up to £150 million ($262 million) and will contribute to an increase in combined capacity to £830 million ($1.452 billion) in 2006, up from £742 million ($1.298 billion) in 2005. The increase in capacity will enable syndicate 623/2623 to take advantage of improving market conditions following the 2005 U.S. hurricanes. Additionally, the syndicate benefits from the financial strength of the Lloyd’s market, which underpins the security of all Lloyd’s syndicates.”
Best said it “forecasts solid profits, after personal expenses, for syndicate 623/2623 of approximately 14 percent of capacity for 2003 year of account and 7 percent for 2004, in line with the syndicate’s September 2005 Quarterly Monitoring Return.” Best indicated that despite a potential net exposure of £106 million ($185 million) to the 2005 hurricanes, it “believes syndicate 623/2623’s 2005 results are likely to compare favorably with its Lloyd’s market peers. Future financial performance of syndicate 623/2623 is likely to continue to be supported by its strategy of expanding into areas where the rating environment remains relatively favorable.”