Best Affirms Ratings of Lloyd’s Syndicate 510, Kiln Group

August 21, 2009

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 510, which is managed by R.J. Kiln & Co .Ltd. (R.J. Kiln). Best also affirmed the ICR of “bbb+” of Kiln Group Limited, the non-operating holding company of R.J. Kiln, as well as the debt ratings of “bbb” on the $30 million and $35 million floating rate subordinated bonds issued by Kiln. The outlook for all of the ratings is stable.

“The syndicate’s ratings reflect the financial strength of the Lloyd’s market, which underpins the security of all Lloyd’s syndicates,” said Best. The rating agency also noted that it believes syndicate 510 “benefits from financial flexibility provided by Tokio Marine Holdings, Inc., the ultimate parent company of the syndicate’s managing agent, R.J. Kiln, and of Kiln Underwriting Limited, which provides 53 percent of the syndicate’s capital.

“Additionally, the syndicate benefits from a comprehensive reinsurance program, which includes two long-standing pro rata treaties. A 53 percent share of each of the two treaties is underwritten by Lloyd’s Syndicate 1880, a new syndicate established for the 2009 year of account by Tokio Marine.”

Best added that on an annual accounting basis it “expects an improvement in syndicate 510’s combined ratio in 2009 (101 percent in 2008). This reflects hardening market conditions for U.S. catastrophe-exposed business and assumes normal catastrophe experience.” Best also anticipates a good return on capacity on a traditional underwriting year of account basis.

Best indicated that the 2008 and 2009 years of account are “supported by the syndicate’s robust reserving methodology and approach to enterprise risk management, prudent risk appetite and the purchase of effective reinsurance protection.”

In Best’s opinion, syndicate 510 “has a strong business profile within the Lloyd’s market as a specialist underwriter in its core areas: short-tail property; marine; political risks; aviation; accident and health and reinsurance. The syndicate writes a diversified account by territory and line of business and leads over 50 percent of its business by premium volume.

“The wide geographical spread of the account is supported by Kiln’s strategy of securing global distribution by acquiring coverholders. These include acquisitions in the UK, Singapore, South Africa, Belgium and Hong Kong.”

Source: A.M. Best –

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