A.M. Best Affirms Ratings of Lloyd's Syndicate 382, Hardy Underwriting Bermuda Limited and Hardy Underwriting Group plc.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the Best's Syndicate Rating of A (Excellent) and the issuer credit rating (ICR) of "a+" of Lloyd's Syndicate 382 (United Kingdom), which is managed by Hardy (Underwriting Agencies) Ltd (HUA). At the same time, A.M. Best has affirmed the ICRs of "bbb" of Hardy Underwriting Bermuda Limited (Hardy Bermuda) (Bermuda), the ultimate holding company of the Hardy group of companies, and of Hardy Underwriting Group plc (Hardy Group) (United Kingdom), the immediate holding company of the syndicate's managing agency (HUA). In addition, A.M. Best has affirmed the debt rating of "bbb-" on the USD 30 million floating rate subordinated bonds issued by Hardy Group in 2006. The outlook on all ratings remains stable.

A.M. Best believes that syndicate 382's financial flexibility continues to benefit from its position as a wholly aligned syndicate within Hardy Bermuda. The rating also reflects the financial strength of the Lloyd's market, which underpins the security of all Lloyd's syndicates.

For the 2009 year of account, syndicate 382's stamp capacity increased to GBP 250 million, up from GBP 110 million the previous year. This significant increase in stamp capacity follows its merger on 1 January 2009 with HUA's syndicate 3820 (2008 capacity: GBP 75 million) and also reflects the weakening in 2008 of sterling against the major currencies in which the syndicate trades. Hardy Bermuda's funds at Lloyd's requirements for the 2009 year of account are met in part by full utilisation of its existing GBP 35 million letter of credit facility.

A.M. Best expects the syndicate to benefit from improved rating conditions in the latter part of 2009, particularly for its catastrophe-exposed business. Modest rate strengthening is also anticipated for the syndicate's aviation business, leading to some improvement in its combined ratio from the 93% achieved in 2008 (annually accounted basis). The syndicate benefits from a conservative asset allocation strategy with no equity holdings. As a result of this approach, a solid net investment yield is expected in 2009 at a comparable level to the 4% achieved in 2008 (including realised/unrealised gains and losses on investments). On an underwriting year basis, the 2006 year of account closed with a strong return on capacity of 21%, which reflected favourable rating conditions and a benign year for catastrophes.

Syndicate 382 occupies a good position within the Lloyd's market as a specialist underwriter of aviation, marine and property business. A.M. Best expects syndicate 382's profile for catastrophe excess of loss business to benefit from its merger with syndicate 3820.

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

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.

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.