Best Affirms Lloyd’s Syndicate 2010 ‘A’ Ratings (Cathedral Capital)

October 29, 2009

A.M. Best Co. has affirmed the Best’s Syndicate Rating of ‘A’ (Excellent) and issuer credit rating (ICR) of “a+” of Lloyd’s Syndicate 2010. At the same time Best affirmed the ICR of “bbb+” of Cathedral Capital Holdings Limited, the non-operating intermediate holding company of the Cathedral group of companies, and debt ratings of “bbb” on the $10 million and €12 million ($17.7 million) floating rate subordinated notes due 2034 issued by Cathedral.

Best also affirmed the debt ratings of “bbb” on both tranches of the $25 million floating rate subordinated notes due 2035 issued by Cathedral. The outlook for all of the ratings remains stable.

“The ratings of syndicate 2010 reflect the financial strength of the Lloyd’s market, which underpins the security of all Lloyd’s syndicates,” Best explained. They also reflect Best’s expectation that the “syndicate will continue to report strong results, supported by its disciplined underwriting approach.”

Best also indicated the syndicate’s combined ratio is “likely to remain strong at approximately 90 percent, subject to normal catastrophe experience in the remainder of the year.”

On a year of account basis, Best said it “expects the syndicate to achieve good results for the open years 2007 and 2008, although the return for 2008 will be affected by losses relating to the year’s hurricanes.

“Syndicate 2010 writes a specialist portfolio of non-marine reinsurance, direct and facultative property insurance and aviation reinsurance. Smaller accounts of contingency and satellite insurance are also written. The syndicate’s portfolio is relatively concentrated in terms of classes of business written and has significant exposure to catastrophe losses.”

In analyzing the portfolio, Best noted that the “potential for volatile earnings that arises from these factors is mitigated by the syndicate’s extensive reinsurance program. However, this leads to an offsetting rating factor, as the syndicate is highly dependent on the program being placed each year.”

Source: A.M. Best –

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