|[January 10, 2013]
A.M. Best Affirms Ratings of Lloyd's Syndicate 2001, Amlin AG and Amlin plc
LONDON --(Business Wire)--
A.M. Best Europe - Rating Services Limited has affirmed the
financial strength rating (FSR) of A+ (Superior) and issuer credit
rating (ICR) of "aa-" of Lloyd's Syndicate 2001, which is managed
by Amlin Underwriting Limited (United Kingdom), and the FSR of A
(Excellent) and ICR of "a" of Amlin AG (Switzerland). At the same
time, A.M. Best has affirmed the ICR of "a-" of Amlin plc (Amlin)
(United Kingdom), the non-operating holding company of the Amlin
group of companies, and the debt ratings of "bbb+" on Amlin's GBP
230 million 6.5% subordinated debt, its USD 50 million 7.28%
subordinated debt and its USD 50 million 7.11% subordinated debt. The
outlook for all ratings is stable.
The financial strength of both Amlin AG and syndicate 2001 benefits from
the support of Amlin, which owns 100% of the syndicate's capacity and
provides assets in the form of bonds and equities to support the
syndicate's funds at Lloyd's. Amlin maintains strong consolidated
risk-adjusted capitalisation, supported by a generally superior
operating performance. However, the series of natural catastrophes
during 2011, together with a weak operating performance from Amlin
Corporate Insurance N.V. (ACI), led to a substantial operating loss
for the group and a significant decrease in the level of consolidated
risk-adjusted capitalisation. In the light of the catastrophes that
occurred in both 2011 and 2010, the Amlin group has taken positive steps
to enhance its management of catastrophe risk, through improved
catastrophe modelling, the purchase of additional reinsurance protection
and the issue in December 2011 of a USD 150 million catastrophe bond.
Whilst the decrease in the level of consolidated risk-adjusted
capitalisation is a cause for concern, A.M. Best believes that these
measures and the steps taken to improve performance at ACI are likely to
provide some protection to the consolidated risk-adjusted capitalisation
from further material reduction. In more normal trading conditions, good
operating prformance is expected to restore risk-adjusted
capitalisation progressively towards the level prior to the 2011 losses.
The stand-alone risk-adjusted capitalisation of Amlin AG (formerly Amlin
Bermuda Limited) also has been reduced, firstly by its change of
domicile to Switzerland from Bermuda and the establishment of its Amlin
Re Europe division in October 2010, which gave rise to an increase in
expenses and underwriting risk, and secondly by a catastrophe-affected
operating performance in 2011. However, the company's risk-adjusted
capitalisation remains at an excellent level and is expected to continue
to do so throughout 2013.
As one of the largest syndicates in Lloyd's, syndicate 2001 has an
excellent market profile and writes the majority of its business from a
lead position. The syndicate continues to be the main underwriting
platform for the Amlin group and is expected to have provided nearly 60%
of consolidated gross premiums in 2012. Amlin AG also has an excellent
business profile. The company's Amlin Bermuda division, established in
2005, writes predominantly a property reinsurance account comprising
catastrophe, risk excess and proportional business, while Amlin Re
Europe underwrites property catastrophe, property risk, marine,
liability and motor business on a proportional and non-proportional
basis. Approximately 60% of Amlin Bermuda's business in 2011 was derived
from the United States. Amlin Re Europe was established to write
European non-life reinsurance and over time is expected to improve
business diversification and earnings stability. Both the syndicate and
Amlin AG continue to benefit from a strong risk management framework,
which A.M. Best believes is fully embedded.
Positive rating actions for the Amlin group are unlikely in the near
future. Factors that may lead to negative rating actions include a
failure to rebuild risk-adjusted capitalisation after the losses of
2011, a significant weakening of operating performance or deterioration
in the group's reserves.
The methodology used in determining these ratings is Best's Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best's rating process and contains the different rating criteria
employed in the rating process. Key criteria utilised include: "Rating
Lloyd's Syndicates"; "Rating Members of Insurance Groups"; "Risk
Management and the Rating Process for Insurance Companies"; "Insurance
Holding Company and Debt Ratings"; "Gauging the Basis Risk of
Catastrophe Bonds"; "Understanding BCAR for Property/Casualty Insurers";
and "Understanding Universal BCAR". Best's Credit Rating Methodology can
be found at www.ambest.com/ratings/methodology.
In accordance with Regulation (EC) No. 1060/2009, the following is a
link to required disclosures: A.M.
Best Europe - Rating Services Limited Supplementary Disclosure.
A.M. Best Europe - Rating Services Limited is a subsidiary of A.M.
Best Company. Founded in 1899, A.M. Best Company is the world's
oldest and most authoritative insurance rating and information source.
For more information, visit www.ambest.com.
Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS
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