A.M. Best Affirms Ratings of Lloyd's Syndicate 1225.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the Best's Syndicate Rating of A (Excellent) and issuer credit rating (ICR) of "a+" of Lloyd's Syndicate 1225 (United Kingdom), which is managed by AEGIS Managing Agency Ltd (AEGIS UK). The outlook for both ratings is stable.

The ratings of syndicate 1225 primarily reflect the financial strength of Lloyd's of London. The syndicate also benefits from its association with its parent company, Associated Electric and Gas Insurance Services Ltd (AEGIS Bermuda), which provides the syndicate's funds at Lloyd's via its corporate member.

Syndicate 1225 has a relatively concentrated underwriting portfolio focused on utility and energy business. A.M. Best anticipates that utility property will account for 22% and energy exploration and production for 16% of premiums in 2008. As a result, the syndicate's future earnings have the potential to be volatile due to its exposure to natural catastrophes, in particular in the Gulf of Mexico. However, the syndicate has reduced this volatility by increasing its catastrophe reinsurance protection and significantly decreasing its Gulf of Mexico exposure.

On an annually accounted basis, A.M. Best anticipates that the syndicate will make a good return on net earned premiums in 2008, subject to catastrophe experience, although earnings are expected to be lower than in 2007 due to weakening market conditions and lower expected investment income. A combined ratio of around 100% is anticipated, compared to 97% reported in 2007. The syndicate is also expected to generate good earnings for 2008 on a year of account basis, subject to catastrophe experience. For the years of account 2006-07, A.M. Best forecasts good returns on capacity of between 5% and 10%, albeit somewhat below previous expectations.

Syndicate 1225 has a strong profile in its core energy business, supported by the association with its parent company, which in A.M. Best's opinion contributes to the syndicate's leadership position in its markets. In 2007, syndicate 1225 led on approximately 38% of the business it wrote and was particularly prominent in the utility property, energy casualty and non-marine casualty markets where it led on approximately 70%, 55% and 50% of risks, respectively.

For Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.