Torus Insurance Holdings Ltd. posted a $30 million loss in its first year of operation, commentary by ratings agency AM Best has revealed.

The Bermuda-based company, which is privately held and so is not obliged to report earnings, had its A- financial strength rating affirmed by Best.

Torus was formed in June 2008 with $720 million in initial capital from private equity group First Reserve Corporation.

It started off as a technical lines insurer, focused on large, complex risks, with a focus on the energy sector. It suffered losses from hurricane Ike of around $20 million, Torus chief executive officer Clive Tobin told The Royal Gazette earlier this year.

The company, which has underwriting platforms in the UK and several US cities, as well as Bermuda, has expanded effectively in a short time, recruiting a batch of experienced executives from rivals including AIG and XL Capital.

"Torus is expected to produce a small consolidated pre-tax profit in 2009, compared to a loss of $30 million in 2008, the group's first year of trading," Best said in its ratings commentary this week.

"However, an underwriting loss is anticipated, partly due to the high level of expenses associated with the group's rapid expansion."

Best sees Torus's technical approach as an advantage in its volatile catastrophe lines, saying "the technical expertise and pricing models embedded in the group's underwriting process are expected to support performance across the cycle".

However, Best said Torus's growth in the casualty market was an offsetting factor. "This business accounts for a materially larger proportion of the group's premium income than initially anticipated by AM Best and introduces greater uncertainty over future performance.

"Although AM Best believes Torus has an underwriting team in place with considerable experience writing the targeted casualty lines, the group will be challenged to develop a profitable account in this market in the face of strong competition from more established insurers and reinsurers."

Best expects capitalisation at Torus and its underwriting units to remain strong.