A.M. Best Upgrades Lloyd's Syndicate 2001, Amlin plc

A.M. Best Co. in Oldwick, N.J., said today it has upgraded Lloyd's Syndicate 2001, which is managed by Amlin Underwriting Limited.

The firm said it raised the rating to "A-plus" (Superior) from "A" (Excellent) and the issuer credit rating to "double-a-minus" from "a-plus."

At the same time, Best upgraded Amlin plc, the non-operating holding company of the Amlin group of companies, issuer credit rating to "a-minus" from "triple-b-plus," and the debt ratings to "triple-b-plus" from "triple-b" on the fixed-to-floating rate subordinated notes issued by Amlin as follows: on $50 million due in 2019; $50 million due in 2020; and ?230 million ($472,056,600) due in 2026. The outlook for all ratings is stable.

The rating upgrades reflect syndicate 2001's consistent superior performance, its strong reserves and robust market profile derived from its well-diversified account, Best said.

The ratings agency said it believes these factors are likely to continue to support the syndicate's ratings and that Amlin's strong risk management framework will benefit the syndicate as market conditions deteriorate.

Best said the syndicate's financial flexibility is enhanced by continued support provided by its parent, Amlin Plc, which maintains strong consolidated risk-adjusted capitalization.

Best also said the syndicate's financial strength is further enhanced by holding funds at Lloyd's above the level required by Lloyd's, which is the default level of 40 percent of capacity.

The syndicate's relatively low funds at Lloyd's requirement reflects the diversified nature of its composite account.

Syndicate 2001 has an allocated capacity of ?1 billion ($2 billion) in 2007, which is expected to fall to ?825 million ($1.7 billion) in 2008 in response to softening market conditions.

Best said it anticipates a continuation of the syndicate's strong performance for the 2006 and 2007 underwriting years. Performance has been supported by a buoyant rating environment for catastrophe-exposed business, reduced reinsurance purchase and favorable catastrophe experience in 2006 and in 2007 to date.

The rating firm said it believes the impact of windstorm Kyrill and flooding in the United Kingdom and Australia in 2007 is likely to be modest. Performance for 2005 is likely to exceed Best's earlier expectations, with a return of 8 percent on capacity now anticipated in line with the syndicate's June 2007 forecast.

On an annually accounted basis, Best said it anticipates a combined ratio of 80 to 85 for 2007 incorporating a significant reserve release.

Syndicate 2001, Best said, has a robust market profile as one of the largest syndicates in Lloyd's, with a leadership position for most classes it writes (the syndicate leads approximately 55 percent of business by premium volume).

The syndicate's account is well diversified both by line of business and territory, Best said, adding that it believes the syndicate continues to maintain a strong risk management framework, which is fully embedded across Amlin's operations.