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

October 21, 2010

A.M. Best Europe – Rating Services Limited 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 the debt ratings of “bbb” on the $10 million and €12 million [$16.84 million] floating rate subordinated notes due 2034 issued by Cathedral.

Best has 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 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,” said Best. In addition, the ratings factor the “syndicate’s track record of producing strong results, supported by its disciplined underwriting approach.”

Best also indicated that the syndicate is “likely to report a good combined ratio of 90 percent-95 percent in 2010, despite above average natural catastrophe loss experience in the first half of the year. For the open years of 2008 and 2009 on a year of account basis, the syndicate is also expected to achieve good returns on premiums, despite exposure to hurricanes Gustav and Ike for the 2008 year of account and exposure to the Chilean earthquake for the 2009 year of account.

“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.

However, the potential for volatile earnings that arises from these factors is mitigated by the syndicate’s extensive reinsurance program. 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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