Steamship Mutual Underwriting Association (Bermuda) Ltd. has been given an A (Excellent) financial strength rating by AM Best.

Best says this rating reflects maintenance of Steamship's leading position within the international group and the protection and indemnity industry. It also reflects its strong capital position and extensive reinsurance protection.

But this is offset by factors including the continuing competitive pressures in global insurance and reinsurance markets and deterioration in Steamship's operating performance in the year under review.

As of February 20, 2000 Steamship had entered tonnage of 64.1 million and ranked fourth in the international group of its class. Diversification on a geographic, vessel type and business clss basis was maintained and management continued to establish new business and launch innovative products, said Best.

As well as the creation of Portsure in 1999, a joint venture with XL Capital-owned Brockbank providing coverage for ports, in 2000 management established Origin Ltd. with Associated Electric & Gas Insurance Services to provide protection for oil rig and drilling contractors.

Free reserves rose seven percent over the previous year to $113.7 million.

Best said the capital level remains secure and Steamship continues to benefit significantly from its mutual structure, through which it has access to additional funds through calls on members should the need arise.

As a participant in the International Group of P&I Clubs, Steamship benefits from the reinsurance programme in place to protect members. A new, club specific, long term reinsurance facility has also been introduced for the underwriting year commencing February 20 2000. This is designed to protect members from unbudgeted additional calls arising from unexpected hikes in retained claims and hence promote increased certainty.

Steamship reported a deterioration in its operating performance for the year under review. Premium levels fell, operating ratios increased and the bottom line results were boosted by realised capital gains.

However Best said that mitigating factors are that these trends applied industrywide and that, unlike proprietary companies, it must be remembered that Steamship's focus is the achievement of a long term, bottom line, break even position.