Best Affirms Lloyd’s Syndicate 570 (Atrium) ‘A’ Ratings; Outlook Stable

A.M. Best Europe – Rating Services Limited has affirmed the Best’s Syndicate Rating of ‘A’ (Excellent) and issuer credit rating of “a+” of Lloyd’s Syndicate 570, which is managed by Atrium Underwriters Limited (AUL). The outlook for both ratings remains stable.

Syndicate 570’s financial strength is “supported by the underlying strength of the Lloyd’s market,” best explained. In addition, the syndicate’s financial flexibility is enhanced by Ariel Holdings, Ltd., the ultimate holding company of AUL.

“Capacity for the syndicate’s 2010 year of account is provided by Ariel’s corporate Lloyd’s member, Atrium 5 Limited (25 percent), and third party capital providers, largely traditional Lloyd’s Names (75 percent). Capacity for the 2011 year of account is set to remain at £145 million [$233.8 million], reflecting the expectation that market conditions will remain weak for many of syndicate 570’s lines of business. Atrium 5 Limited’s funds at Lloyd’s requirement is met by letters of credit guaranteed by Ariel and/or Ariel Reinsurance Company Ltd.”

Best added that the syndicate’s “well diversified portfolio and relatively modest exposure to catastrophe-exposed business (approximately 15 percent of business written) continues to provide some protection against volatility in technical performance.

“On an annually accounted basis, the combined ratio is expected to deteriorate from the 87.5 percent achieved in 2009 to between 90 percent and 95 percent in 2010, reflecting the challenging rating environment. On a year of account basis, 2007 closed with a good return on capacity of 17.6 percent (2006: 19.5 percent), reflecting a low level of catastrophic events as well as benign loss development on run-off years (particularly in the direct and reinsurance property and accident and health lines).

“Syndicate 570 maintains a well diversified portfolio of specialty lines targeted at small to medium-sized commercial businesses. Principal lines of business are accident and health, professional liability, property direct, property reinsurance and marine, aviation and transport. Over 50 percent of business is written through US coverholders, the majority of which have a long-standing association with syndicate 570. In addition, distribution is supported by the syndicate’s web-based AU Gold platform.

Source: A.M. Best