Limit under review for upgrade

Moody's has placed the A- (Good), positive outlook, performance rating of Lloyd's syndicate 386 (Limit Underwriting) under review for possible upgrade.

The agency said that the review for upgrade reflected the syndicate's very good profitability in recent years and the expectation that future returns are more likely than not to be consistent with an A (Very Good) performance rating.

Moody's stated that syndicate 386 has recently outperformed its A- performance rating peer group in recording profits of 4%, 21%, 39% and 35% of capacity for the 2001-2004 years of account. Furthermore, for 2006 the syndicate has reported a very good annually accounted profit of
£123m, 33% of net premium earned, and a combined ratio of 78%.

The syndicate, 70% backed by QBE, writes a UK and international liability account with a strong franchise in these areas. Its cross-cycle, nine year average return to 2006, including mid-point forecasts for 2005 and 2006
of profits of 30% and 24%, is an average profit of 18% of capacity under three-year accounting. The recent reduction of the syndicate's RBC / ECA ratio should enhance prospective returns on capital, which have historically been restricted by a high RBC ratio.