Home > News
Moody’s upgrades the B- Below Average Performance Rating of Lloyd’s Syndicate 0260 to B Average.
Moody’s upgrades the B- Below Average Performance Rating of Lloyd’s Syndicate 0260 to B Average
LONDON, 21st April 2008 – Moody's Investors Service (Moody’s) today upgraded the B – Below Average performance rating of Lloyd's syndicate 0260 (KGM Underwriting Agencies Ltd) to B Average. The rating agency said that the upgrade was based on the syndicate's above average profitability in recent years and the potential for future returns and continuity prospects to have the potential to be consistent with a B (Average) performance rating. The outlook for the rating is stable.
The syndicate, c.60% backed by private investment vehicle Perseverance Ltd and with a capacity of £54m, writes a specialist UK Motor account.
Moody's stated that syndicate 260 has recently out-performed its B- performance rating peer group in recording profits of 6%, 3%, 5%, 11% and 14% of capacity for the 2001-2005 years of account. Furthermore, for 2004 to 2007 the syndicate has reported an above average annually accounted average profit of 14% of Net Premium Earned (NPE), recently reporting a profit of 7% NPE for 2007 on a combined ratio of 106% (2006 16% NPE, combined ratio 103%). It is currently forecasting a profit of 5.6% of capacity for 2006 under three-year accounting.
The forecast open year profit and annually accounted profits are despite the syndicate expanding and refocusing its account on specialist comprehensive business, in the Motor insurance market downturn. Its cross-cycle, 9 year average return to 2006, including its mid-point forecast for 2006 of 5.6%, is an average profit of 7% of capacity under three-year accounting.
Moody’s has previously had concerns over the long-term nature of one private investment vehicle allocating a significant proportion of capital to this business, with third party support having reduced materially since 2002, combined with the likelihood of further consolidation in the Motor market.
However, with above average performance in recent years, and the potential for third party support based on recent results should the dedicated vehicle reduce its involvement, Moody’s has upgraded the B- Below Average performance rating of KGM syndicate 260 to B Average, reflecting Moody’s view of relative performance and continuity prospects for the syndicate over the insurance cycle.
The syndicate has declined Moody's invitation to participate in the rating process, and has not communicated with Moody's on rating-related issues for at least 12 months.
The last rating action was in March 2008 when the syndicate’s B- Below Average performance rating was placed under review for possible upgrade.
KGM Syndicate 260 is a Motor syndicate backed c.60% by Perseverance Ltd (Gibraltar), which operates within the Lloyds of London insurance market.
Back to menu
