Backing by QBE puts syndicate 2999 in strong position

Moody's has upgraded the performance rating of Lloyd's syndicate 2999 - that of Limit Underwriting - to B+ (Above Average) from B (Average).

The rating agency said that the upgrade reflected QBE's commitment to the syndicate and improving results from the business now written.

This was together with the expectation that future returns are more likely than not to be consistent with a B+ (Above Average) performance rating and that the syndicate should offer above average continuity for policyholders.

Moody's said that the action taken concludes the review for possible upgrade that was initiated in April 2007.

Syndicate 2999 is managed by Limit Underwriting, whose ultimate holding company is Australian Stock Exchange listed, QBE Insurance (QBE), which had shareholders' funds of A$ 7.7bn (£3.3bn) at the end of June.

QBE's Lloyd's operation is 20% of its overall Gross Written Premium (GWP) with syndicate 2999 representing 15%. All of syndicate 2999's capacity is provided by QBE.

For 2007, syndicate 2999 has a capacity of £780m and is comprised of five distinct trading entities, sub-syndicates 566, 1036, 2000, 1886 and 5555 with 2007 GWP estimated at 31%, 28%, 25%, 5% and 11% respectively.

The syndicate was formed in 2000, its profile changing significantly since then, incorporating the re-engineered book of syndicate 79 from 2002, syndicate 566 from 2003, syndicate 1036 from 2005, QBE Insurance (Europe) General Liability and Overseas Motor business from 2006, with a new Aviation book also written from 2006.

It recorded losses of 29% and 13% of capacity for 2000 and 2001 respectively and a below average profit of 5% for 2002, although Moody's does not consider these results to be indicative of the book now written.

A profit of 15% was recorded for 2003 and 11% for 2004. The agency is currently forecasting a mid point loss of 2% for 2005 and a mid-point profit of 22% of capacity for 2006.

Syndicates 566 and 1036 respectively had seven year average profits of 1% and of 9% of capacity, prior to their merger into syndicate 2999.