Best Assigns ‘A Rating to Wellington’s Lloyd’s Syndicate 2020

July 10, 2006

A.M. Best Co. has assigned a Best’s Syndicate Rating of “A” (Excellent) and an issuer credit rating of “a” to Lloyd’s Syndicate 2020, managed by Wellington Underwriting Agencies Limited (WUAL). The outlook for both ratings is stable.

“The ratings reflect support provided by the financial strength of the Lloyd’s market,” said Best. It also indicated that they were based on its belief in syndicate 2020’s financial flexibility, which is “is enhanced by continued support provided by its parent, Wellington Underwriting plc, which may have the capability to raise additional funds if required.”

Best said it “believes that it is likely syndicate 2020 will return to profitability in 2006, in line with its historic norm and assuming the absence of further exceptional catastrophe events. The syndicate’s exposure to hurricanes Katrina, Rita and Wilma is expected to significantly impact the 2005 year of account, and A.M. Best anticipates a loss on capacity (after personal expenses) of 17.5 percent. On an annually accounted basis, the syndicate reported a combined ratio of 121.8 percent for 2005.”

Best also noted “that actions taken subsequent to the losses of 2005 have strengthened the syndicate’s risk controls,” however the rating agency continues to believe “that prospective earnings remain exposed to catastrophe events. The syndicate introduced strict aggregate limits, purchased additional reinsurance and reduced line sizes.

“Syndicate 2020 has an excellent market profile within the Lloyd’s market, supported by its leadership position on over half of the business underwritten. The syndicate also benefits from access to direct U.S. business through the group’s U.S.-based managing agent, Wellington Underwriting Inc.”

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