S&P Releases Lloyd’s Market Study

March 6, 2006

Standard & Poor’s Ratings Services announced that it has reviewed its Lloyd’s Syndicate Assessments (LSA’s). S&P rates Lloyd’s “A” with a stable outlook. The individual assessments of the syndicates follows the rating agency’s “review of syndicate information and confirmation of membership of the Lloyd’s Market for the 2006 underwriting year.”

S&P notes: “The Lloyd’s Market in 2006 comprises 62 syndicates, with Market capacity at £14.8 billion [$26 billion], up 8 percent from 2005. The principal changes to the Market structure this year are the closure of Danish Re – Syndicate 1800 (not assessed), and the transfer of the business of Imagine Underwriting – Syndicate 1923 to Gibraltar-based Motoring & Leisure Insurance Co. Ltd. and subsequent closure of the syndicate.

“In addition, one new operation has commenced trading for 2006: Creechurch Underwriting – Syndicate 3786, which will write Takaful business. Jubilee Managing Agency – Syndicate 5820, which focuses on personal lines predominantly derived from the acquisition of the Cassidy Davis business from St. Paul Travelers Syndicate Management Ltd., commenced midyear 2005.”

S&P indicated that average syndicate capacity is £238 million [$418.9 million], up 8 percent from 2005, “with significant diversity across the Market reflected in the range of individual syndicate capacities, from £3 million [$5.28 million] for the smallest, to £1 billion [$1.76 billion] for the largest.”

S&P also noted that the 12 largest syndicates (20 percent in number) “control more than 53 percent of Market capacity for 2006 (50 percent in 2005), with the bulk of this consisting of Integrated Lloyd’s Vehicle structures. Also, these operations demonstrate capacity growth of 12 percent–substantially ahead of the Market average of 8 percent.”

As of March 2, 2006, S&P said it has “assessed 74 percent of the Lloyd’s Market by syndicate capacity, with 81 percent of assessed capacity at ‘LSA 3’ or higher. There are currently eight syndicates assessed at ‘LSA 1’, 10 at ‘LSA 2’, 18 at ‘LSA 3’, six at ‘LSA 4’, and one at ‘LSA 5’ (see chart).

The review also cites two changes as follows:
— The LSA on Hiscox – Syndicate 0033 (formerly assessed at ‘LSA 3pi’) was withdrawn to eliminate possible confusion concerning the assignment of a public information (‘pi’) LSA to this part of the Hiscox group, given the interactive ratings on Hiscox Insurance Co. Ltd. (A-/Stable/–).
— The LSA on Imagine Underwriting – Syndicate 1923 (formerly assessed at ‘LSA 3pi’) was withdrawn as the syndicate is not trading forward. Business continuity will be available to existing policyholders, as the business has been transferred to Motoring & Leisure Insurance Co. Ltd., a subsidiary of Civil Service Motoring Association Ltd. (CSMA). Previously, CSMA, through the wholly owned corporate member CSMA Capital Ltd., provided 100 percent of capacity to Syndicate 1923.

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