Best Affirms Lloyd’s Syndicate 1414 ‘A+’ Rating

March 19, 2004

A.M. Best Co. announced that it has affirmed its “A+” (Superior) Syndicate Rating of Lloyd’s Syndicate 1414 with a stable outlook.

“The rating reflects explicit support from American Home Assurance Company, excellent expected performance and the excellent profile of the syndicate,” said Best. “An offsetting factor is the syndicate’s lack of track record. The rating is based on A.M. Best’s specific syndicate criteria. (See A.M. Best’s Rating Methodology for Lloyd’s Syndicates at Syndicate 1414 is managed by Ascot Underwriting Limited (AUL).”

Best noted that American Home is a member of the American International Group, Inc., and provides syndicate 1414 with an unconditional guarantee of payment in respect of policyholder liabilities. “The guarantee can be cancelled following notice to A.M. Best and the public; however, this does not affect policyholder obligations to which the syndicate is already committed,” the bulletin continued. “AIG owns 40 percent of AUL through its holding company, Ascot Underwriting Holdings Limited, and 99 percent of the syndicate’s sole member, Ascot Corporate Name Limited.”

Best also indicated that “the timing of the syndicate’s entry into the Lloyd’s market benefited its performance in 2001 and 2002 when its profits are likely to place it among the top performing syndicates in the market (profits as a percentage of capacity after personal expenses of 35 percent recorded for the 2001 year and over 25 percent expected for the 2002 year). Further ahead, A.M. Best expects the syndicate to continue to outperform Lloyd’s as a whole although by a smaller margin than in 2001 and 2002.”

Best concluded: “The syndicate writes a well-diversified account of business with a short-tail emphasis. The main accounts written are property, excess of loss reinsurance and energy, although the syndicate also has a leadership position in certain other specialist classes including terrorism and political risks, marine war and specie. Over a third of business is written from a leadership position. The syndicate’s association with the AIG brand has helped it to overcome the generic risks that arise from establishing start-up operations.”

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