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Best’s News & Research Service - June 25, 2020 10:17 AM (EDT)

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

  • June 25, 2020 10:17 AM (EDT)

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. These 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 distribution of syndicates 2623 and 3623 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). Balance sheet strength is supported by a conservative investment strategy, although the group maintains a moderate allocation to higher-yield instruments. During the first quarter of 2020, Beazley reduced its exposure to some capital-growth assets in order to minimise the negative impact of COVID-19-related investment market volatility. In May 2020, Beazley completed a capital raise of approximately USD 300 million, which strengthened its balance sheet.

Beazley’s strong operating performance is evidenced by its five-year weighted average return on equity of 12.4% (2015-2019) and a combined ratio of 93.6%. Beazley’s underwriting performance has been affected recently by a high incidence of natural catastrophe losses and an increase in claims in its management liability book in the United States, reflecting market-wide issues. Contributions from prior-year reserve releases have been lower compared with historical levels. Nonetheless, AM Best expects Beazley’s cross-cycle underwriting performance to remain strong, supported by its underwriting actions and an improved pricing environment in its core business segments.

Beazley has a well-established business profile, with a strong franchise as an internationally-recognised insurance group operating principally at Lloyd’s. The group’s gross written premium base reached USD 3.0 billion in 2019 and is expected to continue to expand in the medium term. During the first quarter of 2020, premiums increased by 13%, compared with the same period last year.

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 good 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. Syndicates 3623 and 3622 are much smaller in comparison. Syndicate 3623 writes personal accident and sports insurance and market facilities at Lloyd’s, in addition to providing reinsurance to Beazley’s U.S.-admitted carrier, BICI. Syndicate 3622 is a dedicated syndicate writing life insurance 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 Guide to 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, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

Ireland Financial Strength Lloyds Press Release United Kingdom A.M. Best Rating Services, Inc. Insurance Lloyds Syndicates Issuer Credit Rating Best's Credit Rating Action Rating Event

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