Strains of start up and catastrophes no barrier to success

Standard & Poor's (S&P) has raised its Lloyd's Syndicate Assessment on Canopius Managing Agents – Syndicate 4444 to 3- from 2+. The outlook is stable.

"The upgrade reflects its good competitive position, good earnings, and conservative investment strategy," said S&P’s credit analyst Eoin Naughton.

S&P said the assessment was constrained by the limited financial flexibility of the holding company and its exposure to large loss events, which have the potential to constrain capital adequacy.

“The syndicate's competitive position is good, based on its size (£410m capacity for 2008) and well-diversified underwriting portfolio. In addition, the syndicate has a good lead position in many of its key lines, and strong renewal business retention,” S&P said.

Syndicate 4444's operating performance is considered good in light of improved results in 2006 and for 2007. Its moderate track record since launch in 2004, represented by an average combined ratio of 100.1%, reflects the strains of start-up and a high incidence of natural catastrophes in 2004 and 2005.

“Operating performance for 2008 is expected to be show some deterioration compared with 2007 as a result of hurricane losses, but with the syndicate generating a combined ratio of under 100%,” S&P said.