Moody's has assigned Amlin Bermuda an insurance financial strength rating of...
Moody's Investors Service has assigned Amlin Bermuda an insurance financial strength rating of A2 with a stable outlook.
It also affirmed the A1 rating of Amlin's Lloyd's Syndicate 2001 and the Baa3 subordinated debt rating.
Moody's said the Bermuda reinsurer's rating reflected the good access Amlin had to catastrophe and other reinsurance business via Syndicate 2001.
Moody's felt the syndicate had significantly out-performed in recent years, through account diversity via a quota share of Syndicate 2001's whole account business, its strong potential to capitalise on a hard market with no legacy reserving issues and good capitalisation.
It added: “These strengths are offset by inherent operational risk, the absence of a track record in its own right, and account volatility with catastrophe business orientation.”
In the opinion of Moody's, a key credit strength for Amlin Bermuda is that although a start-up operation in name, it is able to access Syndicate 2001's London market reinsurance business by way of writing additional lines on existing business which has a long and profitable track record.
Furthermore, around 30% of the company's 2006 GPW is expected to emanate from a whole account quota share of Syndicate 2001, which has significantly out-performed the Lloyd's market in recent years.
The quota share, together with facultative reinsurances of the syndicate's primary business, brings account diversity to Amlin Bermuda, and this relationship with Syndicate 2001 is expected to continue for at least the medium term.
Moody's said it believed Amlin Bermuda had strong potential to capitalise on the significantly improved market conditions post the 2005 hurricanes with the advantage of having no legacy reserving issues.
The rating agency also believes that the company has a good level of capitalisation at $1bn in relation to its expected premium volume and exposure.
It added that these strengths are offset by inherent operational risk, the absence of a track record in its own right notwithstanding Syndicate 2001's performance and the inherent volatility of the business it will write.
The ratings agency said the affirmation of Syndicate 2001's A1 IFSR reflects the continuation of strong underwriting skills and underwriting controls, a good franchise and good earnings, together with the expectation that it will continue to deliver above-average performance over the underwriting cycle.
