Best’s News & Research Service - August 23, 2018 09:35 AM (EDT)
A.M. Best Affirms Credit Ratings of Beazley’s Lloyd’s Syndicates, Beazley Ins. Designated Activity Co. and Beazley Ins. Co.
- August 23, 2018 09:35 AM (EDT)
London //BestWire// - A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a+” of of Lloyd’s Syndicate 2623, Lloyd’s Syndicate 623, Lloyd’s Syndicate 3623 and Lloyd’s Syndicate 3622 (the syndicates) (United Kingdom). Concurrently, A.M. Best has affirmed the FSR of A (Excellent) and the Long-Term ICRs of “a” of Beazley Insurance Designated Activity Company (BIDAC) (Ireland) and Beazley Insurance Company, Inc. (BICI) (Farmington, CT). The outlook of these Credit Ratings (ratings) is stable.
The ratings of BIDAC and BICI reflect the consolidated balance sheet strength of Beazley plc (Beazley) [LSE: BEZ], which A.M. Best categorises as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management. BIDAC and BICI are strategically important to and integrated within Beazley. Both companies are wholly owned by Beazley, which is the ultimate non-operating holding company and consolidating rating unit for the group. BIDAC reinsures 75% of the profit or loss of the syndicates’ (2623and 3623) distribution to Beazley’s Lloyd’s corporate member (after a deductible in the case of a loss), whereas BICI is an expanding admitted insurer in the United States.
The group’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Beazley’s strong operating performance is evidenced by its five-year average return on equity of 16% (2013-2017) and average combined ratio over the same period of 88%. Although catastrophe losses dampened underwriting performance in 2017, the overall result for the year was robust. A.M. Best expects prospective performance to remain strong. Beazley has a well-established business profile, with a strong franchise as an internationally recognised Lloyd’s insurance group. Beazley has a good competitive position in its target markets, but competition is strong and market conditions remain challenging. The group’s gross premium base reached USD 2.3 billion in 2017, and is expected to grow to USD 2.6 billion in 2018.
The syndicates are managed by Beazley Furlonge Limited, and their ratings also reflect the financial strength of the Lloyd’s market, which underpins the security of all syndicates. The capital of syndicates 2623, 3623 and 3622 is provided by Beazley plc [LSE:BEZ] via its corporate member, whilst syndicate 623 is supported by third-party capital. Syndicates 2623 and 623 have a track record of strong operating performance and resilient positions in the Lloyd’s market. Together, they underwrite business at Lloyd’s in parallel, with their shares of combined business split according to each syndicate’s portion of overall combined capacity. The excellent performance of syndicates 2623 and 623 is demonstrated by a five-year average combined ratio of 88% (2013-2017). Syndicate 3623 writes accident and sports business, and reinsures Beazley’s U.S.-admitted carrier, BICI. Syndicate 3622 is a dedicated life syndicate, writing life business associated with Syndicate 3623’s accident and sport portfolio. The performance of these two syndicates historically has not matched that of syndicates 2623 and 623; however, A.M. Best expects Syndicate 3623’s performance to improve over the medium term, as Beazley’s admitted business in the United States attains scale.
This press release relates to Credit Ratings 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 see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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