Moody's has affirmed the A2 Insurance Financial Strength Rating of Lloyd's syndicate 2020 - Wellington Underwriting - following the offer by Catlin to acquire Wellington.
Catlin and Wellington announced a recommended cash and shares offer by Catlin for Wellington on 30 October, under which Wellington syndicate 2020 is due to cease trading on 31 December 2006.
The business will be absorbed within the Catlin Group, including Catlin Lloyd's syndicate 2003, but this is subject to shareholder and regulatory approval.
The merger would create a group with combined gross premiums of $2.4bn and net assets of $1.9bn.
The merger of syndicates 2020 and 2003 would create the largest underwriting operation at Lloyd's with a combined 2007 capacity of up to £1.25bn.
The liabilities of existing policyholders on syndicate 2020 are to be taken on by syndicate 2003 when the 2006 account of syndicate 2020 closes into syndicate 2003's 2007 account.
Moody's commented that the merger would create a group with a well-diversified specialty property and casualty portfolio with a significant presence in the London Market.
Moody's also noted the synergies involved in terms of Wellington's stated strategy of developing a Bermudan operation and the combination of the Catlin and Wellington US operations.
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