AM Best has affirmed the financial strength rating of A (Excellent) and downgraded the issuer credit rating (ICR) to “a” from “a+” of Lloyd's Syndicate 2003. The outlook for both ratings is stable.
The syndicate is managed by Catlin Underwriting Agencies Limited (CUAL), which forms an integral part of Catlin Group Limited (CGL), a Bermudian holding company.
The syndicate's ICR has been downgraded due to a reduction in AM Best's expectations for the syndicate's future performance. AM Best's believes there is potential for future volatility in the syndicate's reserves, particularly relating to prior year legal expenses exposure. The syndicate's 2002 closed-year profit of 9.4% of capacity fell below AM Best's expectations as a result of adverse prior year deterioration of £15m ($29m). In addition, the syndicate's open 2004 year is likely to be adversely affected by catastrophe losses, and AM Best anticipates a profit below earlier expectations at approximately 10% of capacity.
The syndicate's ratings continue to reflect its excellent capital flexibility as part of CGL, with the syndicate's underwriting substantially supported by Catlin Insurance Co Ltd (CICL) in Bermuda. The syndicate is provided with a letter of credit (LOC) from a syndicate of banks with a 2005 value of £117m ($225m), which is guaranteed by Catlin Insurance Company Limited (CICL) (Bermuda) and other Catlin group companies. In addition to this, CICL provides the syndicate, through Catlin Syndicate Limited, with Funds at Lloyd's of £123m ($237m) and supports the syndicate's 2005 underwriting with a 50% whole account quota share. The syndicate's profile benefits from the presence in the London market of CICL's subsidiary Catlin Insurance Company (UK) Ltd, as well as its strategy of writing a broad spread of business from a lead position.
