Kiln has carpeted the rating agency Moody's for predicting that two of its syndicates would merge.

Managing director Edward Creasy insists Lloyd's syndicate 807 will continue to stand alone despite Moody's forecast that it would merge with Kiln syndicate 510.

Moody's has downgraded the performance rating of 807 from B+ above average to B average with a negative outlook.

The ratings agency said this was due to 807's forecast losses of 14% for 1998 and 8% for 1999 and “the potential for consolidation of the account into syndicate 510”.

Moody's said the syndicate's sound management and 47% capital backing from group company Kiln were not enough for it to perform better than the Lloyd's average cycle return.

However, Creasy said: “As far as I'm concerned, 807 is a stand-alone syndicate and will stay a stand-alone syndicate as long as it has the support of the market, a sustainable business plan and potential for profit.”

Creasy said the forecast losses for 807, which concentrates on US health and property business, resulted from the poor performance of the US medical expenses account.

The active underwriter of 807 is Stephen Mathers.