S&P Publishes Lloyd’s Syndicate Review

January 29, 2007

Standard & Poor’s Ratings Services reported that it has preliminarily reviewed its Lloyd’s Syndicate Assessment (LSA) coverage for 2007. S&P said it will “undertake a full review of the LSAs upon receipt of the year-end report and accounts for 2006.” The preliminary assessment follows confirmation of membership of the Lloyd’s Market, which has an overall S&P rating of “A” with a positive outlook.

The report notes that the 2007 Market “comprises 66 syndicates, with capacity at an all-time high of £16.1 billion [$31.9 billion], up 9 percent from £14.8 billion [$29.3 billion] in 2006. This increase in capacity reflects the expectation that rates within key lines of insurance and reinsurance will remain hard, and that Lloyd’s remains attractive to new capital.

“The principal changes to the Market structure this year are the introduction of three special-purpose syndicates (SPS), the cessation of one syndicate, the merger of four pairs of syndicates, and the start-up of two syndicates.

“Average syndicate capacity is £244 million [$483 million], up 3 percent from 2006, with significant diversity across the Market reflected in the range of individual syndicate capacities, from £1.8 million [$3.56 million] for the smallest, to £1.1 billion [$2.18 billion) for the largest.

“The largest 10 syndicates (15 percent of the total by number) control 48 percent of Market capacity for 2007 (47 percent in 2006); the bulk of this consists of Integrated Lloyd’s Vehicle structures. Capacity growth rates for syndicates trading forward vary across the market between 140 percent and negative 40 percent.

“At Jan. 23, 2007, Standard & Poor’s assessed 77 percent of the Lloyd’s Market by syndicate capacity, with 75 percent of assessed capacity at ‘LSA 3’ or higher. There are four syndicates assessed at ‘LSA 1’, 12 at ‘LSA 2’, 19 at ‘LSA 3’, six at ‘LSA 4’, and one at ‘LSA 5’. A further two syndicates are backed by corporate members carrying guarantees.”

The full report, which lists all the Lloyd’s Syndicates and their managing agents as well as their capacity and LSA ratings, is available to subscribers of RatingsDirect, the real-time Web-based source for Standard & Poor’s credit ratings, research, and risk analysis, at: www.ratingsdirect.com.

If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-9823 or sending an e-mail to: research_request@standardandpoors.com.

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