Lloyd’s MS Amlin Underwriting gets downgraded due to losses

Syndicate Research (SRL) has downgraded the A-^ (Good) Continuity Opinion of Lloyd’s Syndicate 2001 (MS Amlin Underwriting) to B+^ (Above Average) following the announcement of its  2017 annual results and put it under review for further possible downgrade.

The syndicate continues to materially underperform relative to its Continuity Opinion peer group, the analysts noted. The Syndicate 2001’s Continuity Opinion remains under review for further possible downgrade pending the receipt of further information.

Syndicate 2001 is 100 percent backed by Mitsui Sumitomo Insurance Company (MSI) with a 2018 capacity of £1.85 billion, and writes a composite, short-tail orientated account with a strong franchise in the Lloyd’s market. MSI, ultimately owned by MS&AD Insurance Group Holdings, acquired Amlin plc in February 2016 and merged its existing Lloyd’s syndicate 3210 into syndicate 2001 in 2017.

SRL stated that with the combined operation’s underwriting management based on the legacy Amlin team, SRL’s analytical focus was on syndicate 2001’s stand-alone track record. The syndicate recorded a loss, excluding investment returns on Funds at Lloyd’s deposited at the syndicate level (FIS), of £556 million or 40 percent of net premium earned (NPE) on an annually accounted basis for 2017 on a combined ratio of 141 percent (including forex & all personal expenses). This compared to a market average loss excluding FIS of 20 percent of NPE for 2017.

SRL commented that, in terms of reported results, on a cross-cycle basis syndicate 2001 had recorded average profits excluding FIS of 4 percent of NPE for 2009 to 2017 under annual accounting but had recorded more recent 5-year average losses of -4 percent NPE.

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