Syndicate Research Limited (SRL) has downgraded the B^ (Average), negative outlook, Continuity Opinion of Lloyd’s syndicate 5000 (Travelers Syndicate Management Limited) to B-^ (Below Average).
SRL explained that the downgrade was made in light of the syndicate’s underperformance relative to its B (Average) peer group in recent years, and assigned a stable outlook to the new rating.
Syndicate 5000 is 100% backed by The Travelers Companies Inc (Travelers) and writes a composite account.
For 2021 the syndicate’s gross premium written was £337 million, and it recorded a profit of 4% of net premium earned (NPE) on a combined ratio of 93%, benefiting from a reserve release of 10% of NPE.
But SRL stated that, in terms of reported results, on a cross-cycle basis syndicate 5000 had recorded an average loss excluding FIS of 1% of NPE for 2013 to 2021 under annual accounting and more recent 5-year average losses of 14% NPE.
Based on 5-year average returns, would put the syndicate in the C+ (s) (Below Average) range, but analysts note that there have been significant efforts to realign its book in recent years.
These include withdrawing from Open Market Property, Commercial PI and Cargo, or some 16% of the syndicate’s 2018 book, and a new active underwriter having been appointed for 2021.
Furthermore, the agency had undertaken a significant amount of remediation work in 2019 and further remediation work in 2020, with a robust reserving approach being adopted.