2013-09-26 17:22:01 -
A.M. Best Europe – Rating Services Limited has affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit rating (ICR) of “a+” of Lloyd’s Syndicate 510 (United Kingdom), which is managed by R.J. Kiln & Co Limited (R.J. Kiln). The outlook for both ratings remains positive. The outlook was revised to positive on 19 July 2013 following the amended outlook of the Lloyd’s market rating.
The ratings of syndicate 510 reflect the financial strength of the Lloyd’s market, which underpins the security of all Lloyd’s syndicates.
In addition, the syndicate benefits from its association with Tokio Marine Holdings, Inc. (Tokio Marine), which is the ultimate parent of R.J. Kiln and of the syndicate’s main corporate member, Kiln Underwriting Limited
(KUL). For the 2013 year of account, KUL provides 55% of the syndicate’s capacity, and Lloyd’s Syndicate 1880, a syndicate established by Tokio Marine, participates in syndicate 510’s extensive reinsurance programme.
The syndicate has a track record of reporting strong underwriting profits, as demonstrated by a five-year historical combined ratio of 93%. In 2012, on an annually accounted basis, syndicate 510 reported a strong pre-tax profit of GBP 63 million and a combined ratio of 90%, reflecting the excellent performance of the syndicate’s aviation, marine and special risks divisions. However, the final result was affected by significant losses incurred from Superstorm Sandy, which exceeded the syndicate’s catastrophe and large loss budget for the year.
For 2013, a result in line with syndicate 510’s five-year average combined ratio is anticipated, although prospective earnings remain subject to volatility due to exposure to catastrophe losses. Investment income from the syndicate's conservative investment portfolio is likely to be modest, reflecting the low interest rate environment.
Syndicate 510 has a strong business profile within the Lloyd’s market and leads approximately 55% of its business by premium volume. It writes a diversified account by territory and line of business, comprising short-tail property and marine, political, aviation, accident and health and reinsurance risks. For the 2012 year of account, Lloyd’s Syndicate 807 (also managed by RJ Kiln) merged with syndicate 510. The final open year of account of syndicate 807 is expected to close into syndicate 510 at the end of 2013, in line with normal underwriting year of account practice.
A factor that may lead to positive or negative rating actions for the syndicate is a change in the ratings of Lloyd’s, which currently has an FSR of A (Excellent) and an ICR of “a+” with a positive outlook.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M.
Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww ..
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