A.M. Best Assigns Rating to Lloyd’s Syndicate 1414

March 4, 2003

A.M. Best Co. has assigned a Best’s syndicate rating of A+ (Superior) to Lloyd’s Syndicate 1414. The outlook is stable.

The rating reflects explicit support provided by American Home Assurance Company (rated A++ (Superior)), syndicate 1414’s superior expected operating performance and its strong business profile in the Lloyd’s market. A partially offsetting factor is the short trading history of the syndicate.

Explicit support – The syndicate has been provided with an unconditional guarantee of payment in respect of policyholder liabilities by American Home Assurance Company, a member of the American International Group, Inc. (AIG). The guarantee may be terminated following notification to A.M. Best and the public, although this will not affect policyholder obligations committed prior to termination.

Superior expected operating performance – A.M. Best believes syndicate 1414 is likely to achieve superior levels of profitability in the period 2001 to 2003, subject to normal loss experience. Due to the timing of the syndicate’s start-up, it is unencumbered by reserve risk relating to events occurring prior to November 2001. The syndicate is a specialist in classes of business currently experiencing a marked capacity shortage, including terrorism, aviation war and energy.

Strong business profile – The syndicate’s underwriters are leaders in their specialist areas, and the syndicate has quickly built up a well diversified portfolio of business, also benefiting from its association with the AIG brand.

Short trading history – A.M. Best believes that the usual operational risks associated with start-up operations indicate that any assessment of likely future performance is liable to a greater degree of subjectivity than for an established underwriting organisation. Generic risks arising from syndicate 1414’s start-up status are reflected in a specific capital loading in the Lloyd’s risk-based capital (RBC) requirement for the syndicate’s sole member, Ascot Corporate Name Limited (ACNL). The syndicate’s directors and staff own up to 2% of ACNL’s shares, with the balance owned by AIG.

Superior profits are anticipated for the 2001 to 2003 years of account, subject to normal loss experience.
Syndicate 1414 will continue to be supported by a guarantee from American Home Assurance Company.

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