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MS Amlin, one of the biggest Lloyd’s of London insurers, plans to expand in areas such as marine cover and liability insurance after spending three years repairing its underwriting profit margins.
Chief executive Andrew Carrier said 2023 was a “landmark year” where the insurer recorded its best underwriting performance in a decade, making it the latest firm to be lifted by a global surge in insurance prices.
The improvement followed an overhaul to the way the insurer selected what to insure and how much to charge for it. “The underwriting [had] lost its way,” said Carrier, who was promoted to the top job at the start of last year.
MS Amlin, which has not made a significant underwriting profit since it was taken over by Japan’s Mitsui Sumitomo in 2015, achieved an adjusted combined ratio of 86.6 per cent last year, according to full-year performance data shared with the Financial Times.
This figure — a key measure of profitability, which shows claims and expenses as a percentage of premiums — improved by nearly 10 percentage points on the previous year and was its best result since 2013. At the operating level, MS Amlin swung from a £47mn loss in 2022 to a £257mn profit last year.
The insurer is due to underwrite about £2bn of business within Lloyd’s this year and then grow that as a central part of owner Mitsui’s five-year strategy to reach £3bn within Lloyd’s and the so-called company market that surrounds it.
Mitsui chief executive Shinichiro Funabiki told the FT last month that the group had decided to focus its growth plans on London, and MS Amlin in particular, because of the city’s “history and expertise” in analysing complex risks.
MS Amlin is targeting growth in areas such as marine insurance, one of its specialities. It is continuing to provide cover to ships transiting the Red Sea, for which insurance rates have jumped as the Houthi rebel group has attacked commercial ships.
But the company was keeping close eye on evolving risks, Carrier said. “We have growing concerns over submarine drones, which are harder for naval vessels to counter,” he added.
Another focus for MS Amlin is to grow its casualty insurance lines, such as policies which provide cover for legal claims against a company’s management team.
The growth in casualty insurance is intended to provide a “better balance” to its catastrophe-exposed property policies. This part of the insurance industry has been hit by four consecutive years of outsized losses from extreme weather.
“We believe insurers should not shy away from providing cover [against climate effects] and strengthening our business performance provides the capital strength to allow us to do this,” said Carrier. But he added, insurers had to be “realistic” about pricing.
The sector has scrambled to update its models to reflect the growing frequency and severity of natural catastrophes attributed to climate change. MS Amlin’s own modelling predicts that insurance industry losses from US hurricanes could increase by almost 40 per cent in a scenario where global temperatures rise 2C from pre-industrial levels.
