A.M. Best Affirms Ratings of Lloyd’s Syndicate 1225

A.M. Best Co. has affirmed the Best’s Syndicate Rating of A (Excellent) and issuer credit rating of “a+” of Lloyd’s Syndicate 1225 (the syndicate) (United Kingdom), which is managed by AEGIS Managing Agency Limited (AEGIS UK). The outlook for both ratings is stable.

The ratings of syndicate 1225 reflect the financial strength of Lloyd’s of London (Lloyd’s), which underpins the security of all syndicates. The syndicate benefits from its association with Associated Electric & Gas Insurance Services Limited (AEGIS), which provides part of the assets that back the syndicate’s funds at Lloyd’s.

Prospective earnings remain subject to volatility due to exposure to catastrophe losses. However, the syndicate continues to take measures to mitigate this volatility, including diversifying into less catastrophe-exposed lines and reducing exposure to natural catastrophes in peak zones such as the Gulf of Mexico region.

For 2010, the syndicate is likely to return a combined ratio of 95%-100%. This represents a deterioration from the previous year’s combined ratio of 92% and reflects the expectation that 2009’s favourable loss experience will not be replicated in 2010. The expected combined ratio takes into account the syndicate’s estimated loss from the Deepwater Horizon oil rig explosion. In 2009, the syndicate achieved a better than expected pre-tax profit of GBP 52 million, benefitting from benign loss experience and a strong investment return with particular good performance achieved by the equity and high yield fixed income portfolios.

Syndicate 1225 has a good business profile in its energy and utility lines, assisted by its association with AEGIS. The syndicate has a strategy to improve the diversification of its account and has reported strong growth in particular in its non-marine property account. New lines added since 2008 include contingency, leisure, A&H and property treaty reinsurance.

For Best’s Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.