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Best’s News & Research Service - September 26, 2019 08:54 AM (EDT)

AM Best Affirms Credit Ratings of Beazley’s Lloyd’s Syndicates and Beazley plc Subsidiaries

  • September 26, 2019 08:54 AM (EDT)
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London //BestWire// - AM Best has affirmed the Financial Strength Ratings (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of “a+” of Lloyd’s Syndicate 2623, Lloyd’s Syndicate 623, Lloyd’s Syndicate 3623 and Lloyd’s Syndicate 3622 (the syndicates) (United Kingdom). Concurrently, AM Best has affirmed the FSRs of A (Excellent) and the Long-Term ICRs of “a” of Beazley Insurance Designated Activity Company (BIDAC) (Ireland), Beazley Insurance Company, Inc. (BICI) (Farmington, CT) and Beazley America Insurance Company, Inc. (Beazley America) (Farmington, CT). The outlook of these Credit Ratings (ratings) is stable.

The ratings of BIDAC, BICI and Beazley America reflect the consolidated balance sheet strength of Beazley plc (Beazley) [LSE: BEZ], which AM Best categorises as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management. BIDAC, BICI and Beazley America are strategically important to and integrated with Beazley.

All three companies are owned ultimately 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’ (2623 and 3623) distribution to Beazley’s Lloyd’s corporate member (after a deductible) and is the group’s main regulated operating entity in the European Union, whereas BICI and Beazley America are Beazley’s admitted carriers 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 weighted average return on equity of 12.7% (2014-2018) and weighted average combined ratio over the same period of 91.2%. Although catastrophe and attritional losses dampened underwriting performance in 2017, 2018 and the first half of 2019, the overall operating results in these periods remained robust. AM Best expects prospective performance to remain strong, supported by Beazley’s selective profitable growth and an improving pricing environment in its core business segments. Beazley has a well-established business profile, with a strong franchise as an internationally recognised Lloyd’s insurance group, although it is subject to a high level of competition. The group’s gross premium base reached USD 2.6 billion in 2018 and is expected to continue to expand in the medium term.

The syndicates are managed by Beazley Furlonge Limited, and their ratings 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 their five-year weighted average combined ratios of approximately 91% (2014-2018). Syndicates 3623 and 3622 are much smaller in comparison. Syndicate 3623 writes accident and sports business, reinsures Beazley’s U.S.-admitted carrier, BICI, and started writing market facility risks for the first time during 2018, while Syndicate 3622 is a dedicated syndicate, writing life business associated with Syndicate 3623’s accident and sports portfolio.

This press release relates to Credit Ratings that have been published on AM 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 AM 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 AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency and information provider with an exclusive focus on the insurance industry.

Ireland United States Connecticut Europe Financial Strength Lloyds Press Release United Kingdom Insurance Lloyds Syndicates Issuer Credit Rating Best's Credit Rating Action

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