A.M. Best Affirms Ratings of Lloyd's Syndicates 2623 and 623

OLDWICK, N.J.--(Business Wire)--
A.M. Best Co. has affirmed the Best's Syndicate Ratings of A
(Excellent) and the issuer credit ratings of "a+" of Lloyd's Syndicate
2623 and Lloyd's Syndicate 623 (United Kingdom). At the same time,
A.M. Best has affirmed the ICR of "bbb+" of Beazley Group plc
(Beazley) (United Kingdom), the non-operating holding company of the
Beazley group of companies, and the debt ratings of "bbb" on the GBP
150 million junior subordinated notes due 2026 and the USD 18 million
junior subordinated notes due 2034 issued by Beazley. The outlook on
all ratings has been revised to stable from positive, bringing the
outlook in line with the outlook on the ratings of Lloyd's of London.

The ratings reflect the syndicates' excellent financial
flexibility, good prospective operating performance and strong
business profile in the London market. An offsetting factor is
uncertainty relating to the performance of new, predominately
long-tail business written in the local U.S. market, the profitability
of which will only be proven over an extended period of time. This
uncertainty has been heightened following two key changes to the
senior management team, including the departure of the group's head of
specialty lines, and is reflected in the revision of the outlook to
stable from positive.

Syndicates 2623 and 623 are managed on a combined syndicate basis
by Beazley Furlonge Ltd and underwrite business at Lloyd's in
parallel. Syndicate 2623's capacity is provided 100% by Beazley, while
syndicate 623 is supported by third party capital. For the 2008
underwriting year, capacity for the combined syndicates was reduced to
GBP 814 million (USD 1,497 million) from GBP 860 million (USD 1,582
million) in 2007.

In A.M. Best's opinion, financial flexibility is enhanced by the
support of Beazley, which is expected to maintain excellent
consolidated risk-adjusted capitalisation in 2008, despite payment of
a special dividend of GBP 14 million and completion of a GBP 28.3
million share buyback in the first half of the year. In addition, the
syndicates benefit from the financial strength of the Lloyd's market,
which underpins the security of all Lloyd's syndicates.

On an annually accounted basis, A.M. Best anticipates a solid
combined ratio of approximately 90% in 2008, compared with 83% and 82%
in 2007 for syndicate 2623 and syndicate 623, respectively. Technical
performance is likely to be supported by positive prior year reserve
development and Beazley's focus on prudent cycle management. As market
conditions deteriorate, the syndicates' strong business profile in the
London market, particularly within the specialty lines market, is
likely to provide some protection against price-led competition. A
fall in investment income is anticipated, owing to disruption in the
credit and equity markets during the first half of the year.

In response to accelerating rate decreases, the syndicates are
expected to cut back on large scale U.S. risks written in the London
market in 2008. The reduction in premium income is likely to be offset
by an increase in smaller, less volatile U.S. risks, written locally
through Beazley's managing agent, Beazley USA Services Inc (BUSA), and
a quota share reinsurance agreement currently in place with the
group's admitted carrier, Beazley Insurance Company Inc (BICI).
Although this business is expected to reduce the syndicates'
dependence upon large scale risks written at Lloyd's, A.M. Best
believes the profitability of new, predominately long-tail business
and the effectiveness of the overall strategy will not be demonstrated
for some time.

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.

A.M. Best Co.
Analysts
Catherine Thomas, +(44) 20 7626 6264
catherine.thomas@ambest.com
or
Mathilde Jakobsen, +(44) 20 7626 6264
mathilde.jakobsen@ambest.com
or
Public Relations
Jim Peavy, +(1) 908 439 2200, ext. 5644
james.peavy@ambest.com
or
Rachelle Morrow, +(1) 908 439 2200, ext. 5378
rachelle.morrow@ambest.com

Copyright Business Wire 2008