Also affirms Syndicate 382 and Hardy Underwriting Group
AM Best has affirmed the Best’s Syndicate Rating of “A” (Excellent) and the issuer credit rating (ICR) of “a+” of Lloyd’s Syndicate 382, which is managed by Hardy (Underwriting Agencies) Ltd (HUA).
At the same time, AM Best has affirmed the ICR of “bbb” of Hardy Underwriting Group, the syndicate’s immediate holding company, and affirmed the debt rating of “bbb-” on the $30m floating rate subordinated bonds issued by Hardy Group in 2006.
The outlook on all ratings has been revised to stable from positive, reflecting the stable outlook on the rating of Lloyd’s of London.
Additionally, Best has assigned an ICR of “bbb” to Hardy Underwriting Bermuda Limited, the newly established ultimate holding company of the Hardy group of companies. The outlook on this rating is also stable.
The ratings reflect Best’s view that syndicate 382 is likely to benefit from continued financial flexibility as a wholly aligned syndicate within Hardy Bermuda. The ratings also reflect the financial strength of the Lloyd’s market, which underpins the security of all Lloyd’s syndicates.
In 2007 and 2008, the syndicate is expected to maintain its good operating performance, despite weaker rating conditions in its main business lines. On an annually accounted basis, AM Best anticipates a good, albeit higher, combined ratio in 2007 (72% in 2006), due in part to prior year reserve releases.
On an underwriting year basis, AM Best expects the syndicate to return an excellent profit on capacity for the 2006 year of account of approximately 11%-16%, in line with its September 2007 quarterly return, due in part to good rating conditions, particularly in its non-marine catastrophe excess of loss account.
The 2005 year of account is likely to close with an excellent return on capacity of approximately 15%. In AM Best’s opinion, this is a strong forecast given the syndicate’s exposure to US property catastrophe business.