MS Reinsurance faces downgrade on ‘deterioration of risk-adjusted capitalisation’

Ratings agency  AM Best has downgraded the long-term issuer credit rating of Switzerland-domiciled global reinsurer  MS Amlin AG (now MS Reinsurance), a part of the MS Amlin group, citing “deterioration of the company’s risk-adjusted capitalisation” in recent years.

Multiple years of operating losses has contributed to a deterioration in its risk-adjusted capitalisation. The company’s underwriting profitability has been under pressure, demonstrated by a five-year (2017-2021) weighted average combined ratio of approximately 110% (including a combined ratio of 123% in 2021). However, underwriting results were marginally positive in 2022, and are expected to continue to improve as a result of corrective actions taken by the company’s new management team.

“Whilst risk-adjusted capitalisation is expected to recover moderately over the medium term, AM Best expects it to remain at a lower level than it was historically,” the agency noted.

MS Amlin AG’s long-term issuer credit rating has been lowered to “a” from “a+”. The outlook of the long-term ICR has been revised to stable from negative, whereas the outlook on the financial strength rating of “A” is stable.

These credit ratings reflect MS Amlin AG’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM). Additionally, MS Amlin AG’s ratings benefit from rating enhancement, in the form of lift, due to the support provided by its ultimate parent, MS&AD Insurance Group Holdings.

The company’s profile also benefits from its recent rebranding to MS Reinsurance, further strengthening its association with the MS&AD group.

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