London (1) London New York Robert S. Smith Allerton G. Smith Director Senior Director Moody's Analytics UK - Insurance Capital Markets Research Group Moody's Analytics Moody's Analytics JOURNALISTS: 44 20 7772 5456 JOURNALISTS: 212-553-0376 SUBSCRIBERS: 44 20 7772 5454 SUBSCRIBERS: 212-553-1653 Moody’s Analytics places the B (Average) Continuity Opinion of Lloyd’s syndicate 4444 under review for possible upgrade LONDON, January 13th 2014 – Moody's Analytics (Moody’s) today placed the B (Average), stable outlook, continuity opinion of Lloyd's syndicate 4444 (Canopius Managing Agents Limited) under review for possible upgrade following the announcement that NKSJ Holdings (“NKSJ”) had signed an agreement to purchase 100 per cent of the shares of Canopius Group Limited. Syndicate 4444 is managed by Canopius Managing Agents Limited, whose ultimate holding company is Canopius Group Limited (Canopius), which is predominantly backed by private equity funds managed by Bregal Capital LLC. The syndicate writes a composite account with a material binding authority book. For 2014, syndicate 4444 has a capacity of GBP700m with Canopius holding a 67% interest in syndicate 4444. Canopius also holds a 69% interest in syndicate 958 (Continuity Opinion B (Average)), which from 2014 is being written in parallel with syndicate 4444, business being split 80:20 syndicate 4444: syndicate 958, with the syndicates’ combined effective capacity £875m. Please also refer to our separate press release related to syndicate 958’s Continuity Opinion. Syndicate 4444 recorded an annually accounted profit of 11% of Net Premium Earned (NPE) for 2012 on a combined ratio of 95%(including forex) at 31.12.12. Moody’s stated that, in terms of reported results, and including the results of syndicates merged in, on a cross- cycle basis the syndicate had recorded average profits of 4% of NPE for 2004 to 2012 under annual accounting, performing in line with B (Average) continuity opinion benchmark returns in terms of indicative average annual returns on capital. NKSJ and Canopius announced in December 2013 that NKSJ’s subsidiary, Sompo Japan Insurance Inc. (“Sompo”) (Moody’s Investors Service A1 Insurance Financial Strength Rating) was due to acquire Canopius in the second quarter of 2014. On completion, Canopius is due to operate as Sompo’s international, Specialty insurer under its existing brand and management, continuing its current growth strategy. Moody’s commented that Canopius’ 2014 share of syndicate 958 and syndicate 4444’s combined 2012 Net Premium Written (NPW) represented some 5% of Sompo’s 2012 NPW and 3% of ultimate group, NKSJ’s 2012 NPW, although the full details of NKSJ’s participation in the combined syndicates’ operations had not yet been released. Furthermore, no disclosure had yet been made of any public commitment of additional support that might be made by NKSJ on completion of the acquisition. However, with the operation likely to be material to Sompo and with the syndicate’s 5-year average indicative cross-cycle returns on capital in line with the lower end of the B+ (Above Average) peer group, Moody’s has placed the B (Average) continuity opinion of Canopius syndicate 4444 under review for possible upgrade, reflecting Moody’s view of relative performance and continuity prospects for the syndicate over the insurance cycle. Moody’s stated that the review would focus on confirming completion of the acquisition and considering any potential formal commitment to the syndicate from Sompo, should any formal commitment be made. Moody’s continued that any upgrade was likely to be limited to a one-notch upgrade to B+ (Above Average), subject to the proposed acquisition being completed. The last action was in June 2010 when syndicate 4444’s B- (Below Average), positive outlook, continuity opinion was upgraded to B (Average) and a stable outlook assigned. Syndicate 4444 is a composite syndicate, ultimately backed c.67%by the Canopius Group, with 2014 capacity of GBP700m that operates within the Lloyd's of London insurance market. * * * © Copyright 2014 Moody’s Analytics, Inc. and/or its licensors and affiliates (collectively, “MOODY’S”). All rights reserved. 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