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Berkley's New Managing Agent at Lloyd's

Zacks Equity Research

W. R. Berkley Syndicate Management Limited, a unit of W.R. Berkley Corp. (WRB) has been authorized by the UK Financial Services Authority (“FSA”) to act as a Lloyd’s managing agent.

Lloyd’s of London is an insurance market platform conducting business in over 200 countries and territories around the world. It is often the first to write new, complex and unusual risks. Here members join together as syndicates to insure and reinsure risk. These syndicates comprising individuals or corporate houses provide resources, which back the risk on insurance policies.

Managing agents at Lloyd’s sponsor and manage these syndicates. They are in charge of the syndicate’s business strategy and the hiring of underwriters. Managing agents can choose to operate more than one syndicate.

W. R. Berkley Syndicate Management Limited will look after the operations of W. R. Berkley Syndicate 1967 and will replace the earlier managing agent, Whittington Capital Management. The name W. R. Berkley Syndicate 1967 is taken from the year Berkley was founded.

Following its authorization, Berkley now has the global reach and experience to provide insurance solutions pertaining to Lloyd’s platform. The Syndicate will write a wide variety of businesses that include intermediate short-tail property, accident and marine business, where Berkley has already made a name for itself.  The new Syndicate will commence underwriting from June 1, 2012. 

For 2011, Syndicate 1967 reported a profit of $1.93 million, despite record insured losses arising from catastrophe events, with claims in excess of $100 billion. Against the backdrop, the syndicate reported favorably, with a claims ratio of 52.8% and a combined ratio of 98.6%. The Syndicate had its second full year of operation in 2011, after it started underwriting risks in June 2009.

Syndicate capacity is totally provided by W.R. Berkley Corp.  The Syndicate’s capacity for 2012 is £120 million. In 2012, the Syndicate expects to expand its underwriting teams in each of the property, marine and accident line of businesses. 

The Lloyd’s market is witnessing an increase in insurance rates, especially in operating lines where Berkley has a strong presence.  Berkley’s Syndicate expects to take advantage of hardening rates.

Other insurance companies who have Syndicates at Lloyd’s include XL Group plc (XL), ACE Ltd. (ACE), The Travelers Companies, Inc. (TRV), Chubb Corp. (CB).

Berkley currently retains a Zacks # 3 Rank, which translates into a short-term Hold rating. Considering the fundamentals, we are also maintaining our long-term Neutral recommendation on the shares.

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