Best Affirms Amlin (Bermuda) Ratings

December 22, 2006

A.M. Best Co. has affirmed the financial strength rating (FSR) of “A-” (Excellent) and the issuer credit rating (ICR) of “a-” of Amlin Bermuda Limited (ABL) with a stable outlook.

“The ratings reflect ABL’s excellent risk-adjusted capitalization and its first year execution of operations within the parameters of the business plan presented to A.M. Best during the initial rating process in 2005,” said the bulletin.

Best said that “despite the absence of a reinsurance program in 2006-2007,” it remains confident that the spread of business written by the company in its target sectors effectively limits exposure to major losses to a manageable level. ABL’s links to Amlin plc provide the company with a high degree of financial flexibility. Amlin raised £230 million ($450 million) through a subordinated debt issue in April 2006.”

Best also indicated that it “believes that ABL is likely to achieve an excellent profit in the region of £95 million ($186 million) in 2006 and £130 million ($255 million) in 2007.” The rating agency also “anticipates an outstanding loss ratio of approximately 40 percent for 2006 as a result of excellent performance on business assumed from syndicate 2001 [See previous article], and a benign hurricane season.” For 2007, Best said it has “factored some deterioration in the loss ratio,” but expects such losses “to be modest, subject to catastrophe experience.”

Best also noted: “The company continues to leverage the strong relationships that exist between its management team and their broker distribution channels, which have already been established through the group’s syndicate. A.M. Best believes that ABL writes a diversified account both in terms of territory and the classes of business written. Over 90 percent of the account written is likely to comprise either reinsurance of syndicate 2001 or additional lines on existing business written by the syndicate. The company adopts a prudent approach to writing property catastrophe business, focusing on regional coverage with zonal exposures capped using total insured value at risk. Nationwide accounts and retrocession business are avoided.”

Source: A.M. Best

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