Best Affirms Lloyd’s Syndicate 609 Rating; Atrium’s ICR

January 26, 2007

A.M. Best Co. has affirmed the Best’s Syndicate Rating of “A” (Excellent) and the issuer credit rating (ICR) of “a+” of Lloyd’s Syndicate 609, which is managed by Atrium Underwriters Limited. Best also affirmed the ICR of “bbb+” of UK-based Atrium Underwriting Plc (AUP), the non-operating holding company of the Atrium group of companies. The outlook for the ratings remains stable.

In a separate bulletin Best also affirmed the ratings of Atrium’s Syndicate 570 (See following article).

“Syndicate 609’s ratings reflect its strong prospective financial performance and specialist business profile, in addition to the financial strength of the Lloyd’s market, which underpins the security of all Lloyd’s syndicates,” said Best.

Best also indicated it “believes that the diversification of syndicate 609’s portfolio and its history of positive reserve development are reflected in a relatively low funds at Lloyd’s (FAL) requirement in 2007 of 43 percent of capacity. Syndicate 609 has maintained its capacity at £ 215 million ($ 420 million) for the 2007 underwriting year of account, which A.M. Best believes will enable it to take advantage of favorable underwriting conditions in its U.S. exposed property catastrophe lines, which are likely to be offset by softening in other areas of the account.

“Syndicate 609’s ratings also reflect strong anticipated performance in 2006 and further ahead despite a relatively weak performance likely for the 2005 underwriting year. This includes a good return on capacity of above 7.5 percent anticipated for the 2006 year of account due mainly to strong property catastrophe and energy rates for U.S. exposed risks and a benign hurricane season. However, the rating also factors the impact of the 2005 U.S. hurricane season on syndicate 609 (pure year losses of approximately 12 percent of its 2005 capacity are anticipated from this source), and the syndicate is likely to experience a significant overall loss of between 7 percent-12 percent of capacity for the 2005 year of account.”

The rating agency noted that “syndicate 609 benefits from writing a well-diversified specialist portfolio, in particular, its underwriting of marine hull, submarine cables and ports. Syndicate 609’s business profile is further enhanced by writing a geographically diverse portfolio within other business lines including non-marine property, energy and aviation war.”

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