A.M. Best Affirms the Ratings of Lloyd’s Syndicate 1183

A.M. Best has affirmed the financial strength rating of A (Excellent) and the issuer credit rating of “a+” of Lloyd’s Syndicate 1183 (United Kingdom), which is managed by Talbot Underwriting Ltd (Talbot). The outlook for both ratings is positive.

Syndicate 1183’s ratings and outlooks reflect the financial strength of Lloyd’s, which underpins the security of all Lloyd’s syndicates, as well as the syndicate’s strong operating performance and specialist business profile. In addition, the syndicate benefits from its association with Validus Holdings, Ltd. (Validus), which is the ultimate parent of the syndicate’s managing agent, Talbot Underwriting Ltd. (Talbot), and of the syndicate’s corporate member, Talbot 2002 Underwriting Capital Ltd. All the syndicate’s capacity, amounting to GBP 625 million for the 2015 year of account, is provided by the corporate member.

The syndicate has a track record of reporting strong underwriting profits, as demonstrated by a five-year (2010-2014) average combined ratio of 89%. In 2014, on an annually accounted basis, the syndicate reported a solid profit of GBP 68.1 million (2013: GBP 104.8 million), which produced a combined ratio of 88% (2013: 79%). The reduction in profit was attributable to an increase in large claims, including the two Malaysian Airlines losses, the attack at Tripoli airport in Libya and the loss of the Sewol Ferry. The results were, however, supported by a substantial prior year reserve release of GBP 85.8 million (2013: GBP 93.5 million).

Syndicate 1183 has a strong business profile within the Lloyd’s market by virtue of both the Talbot and Validus brands, writing a diversified portfolio of largely short-tail specialty classes of business. The syndicate takes a market leading position in the war and terror, energy and marine classes of business, which enables it to maintain a balanced portfolio within targeted classes. Whilst premiums are primarily written in the London market, Talbot has international hub offices in New York, Miami, Santiago, Dubai, Singapore and Labuan, which together contributed 17% of the syndicate’s gross written premium in 2014. In addition, an office was opened in Sydney in January 2015.

Partly offsetting these positive factors is the syndicate’s exposure to large man-made and natural catastrophe losses, although the performance record shows that this exposure has been well managed to date.

A factor that may lead to positive or negative rating actions for the syndicate is a change in the ratings of Lloyd’s.

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. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilised:

• Catastrophe Analysis in A.M. Best Ratings
• Rating Lloyd's Syndicates
• Rating Members of Insurance Groups
• Risk Management and the Rating Process for Insurance Companies

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.

This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best’s Ratings & Criteria Center.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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