Review for upgrade reflects the syndicate's very good profitability in recent years
Moody's Investors Service has placed the A- (Good), positive outlook, performance rating of Lloyd's syndicate 2001 (Amlin Underwriting Ltd) on review for possible upgrade.
The rating agency said that the review for upgrade reflects the syndicate's very good profitability in recent years and the potential for future returns to be consistent with an A (Very Good) performance rating.
Moody's elaborated that syndicate 2001 has recently out-performed its A- performance rating peer group in recording profits of 1%, 22%, 25%, and 18% of capacity for the 2001-2004 years of account, with overall reserve redundancies a feature. For the 2005 account, syndicate 2001 is currently forecasting a profit of over 5%, notwithstanding estimated net losses from 2005 hurricanes of around 15% of capacity. Furthermore, for 2006 the syndicate has reported a very good annually accounted profit of £219m, 26% of Net Premium Earned, and a combined ratio of 79%.
Syndicate 2001, which is 100% backed by Amlin plc, is the second largest Lloyd's syndicate with a capacity of £1bn and a good franchise, writing a composite short-tail orientated account. Its cross-cycle, 7 year average return to 2005, including its mid-point forecast for 2005, is around 10% of capacity under three-year accounting. For 2006, syndicate 2001's volatility was deliberately increased with less retro cover purchased although peak underwriting exposures were reduced, but this is mitigated by its relatively diverse book and strong underwriting controls, and with relatively little catastrophe activity during 2006, Moody's currently expects syndicate 2001 to record a strong result for the 2006 account.
Moody's stated that the review would focus on the syndicate's ability in the future to achieve levels of profitability consistent with an A rated syndicate, together with underwriting controls including catastrophe exposure management.
