Lloyd’s Syndicate 1084 gains ICR of a+

AM Best has affirmed the Best’s Syndicate Rating of A (Excellent) and the issuer credit rating (ICR) of “a+” of Lloyd’s Syndicate 1084 (United Kingdom). At the same time, AM Best has affirmed the ICR of “bbb” of Chaucer Holdings PLC (CHP) (United Kingdom), the ultimate parent company of the syndicate’s managing agency, Chaucer Syndicates Limited (CSL). AM Best has affirmed the debt rating of “bbb-” on the £20m 8.5% subordinated convertible notes due 2008, issued by CHP. The outlook for all ratings is stable.

AM Best believes the syndicate will report excellent underwriting results for the year ending 2008, despite some deterioration in its combined ratio from the 84% level achieved in 2007 on an annually accounted basis. During 2008, the syndicate has experienced downward pressure on rates, although AM Best does not believe this will be sufficient to completely reverse the gains of previous years. Additionally, since 2007 the syndicate has managed its mix of business so as to give emphasis to classes where rates have remained firmer, helping to protect it from the general rate softening experienced by the market.

In AM Best’s opinion, the syndicate carries prudent reserves and believes there is sufficient margin to fund future releases. There has been a pattern of increasing prior year reserve releases since 2004, culminating in net releases of £50m during 2007.

AM Best believes the syndicate has a good business profile within Lloyd's, supported by the franchise of the Chaucer group, which pursues a diversified strategy to participating in the Lloyd’s market. The group offers a turnkey facility to Lloyd’s syndicates, most notably to Pembroke Managing Agency Limited (Pembroke), which was sold by CHP on 1 July 2008. CSL manages underwriting on behalf of third parties for syndicates 1301, 4242 and 1274. In 2008, CSL is the sixth largest managing agent in Lloyd’s with £766m of capacity under management. CSL also provides run-off management services and arranged an innovative reinsurance to close transaction for syndicate 1245 in March 2008.