Syndicate results 2021 #30 MS Amlin 2001

The Lloyd’s syndicates have now published their results for 2021 and, in some cases, added detail and an outlook for 2022. Some have stuck to the bare bones. As last year, IMN is summarizing the results from all syndicates that have a marine interest, which have provided some information on the marine side.

Active Underwriter   A J Carrier

Syndicate 2001 is a wholly aligned Syndicate of Mitsui Sumitomo Insurance Co Ltd through MS Amlin Corporate Member Ltd. The ultimate parent company is MS&AD Insurance Group Holdings Inc.

Premium capacity for 2021 and 2022 was £1,600m.

The result for calendar year 2021 was a profit of £7.9m (2020: loss of £178.1m).

In 2021 a number of restructuring actions, begun in 2019, were completed. A strategic review led to the cessation of underwriting several lines of business by January 31st 2020. This was followed by a reorganization of MSI’s international business, leading to the Corporate Member and the managing agent becoming direct subsidiaries of MSI (collectively, “the Group”).

During 2020 a review of shared services in the UK was undertaken. The outcome, completed in early 2021, was the transference to the managing agent of a number of support functions and activities. A new executive and senior management team of the managing agent was finalized during the year.

During 2022 the Syndicate said that management intended to continue to address the legacy tail business to manage the cost and capital base, improve the quality of the existing portfolio and, as a result, “establish a platform for future profitability and growth”. This will include cooperation with associate Group companies in expanding the Syndicate’s underwriting activities in the US.

Following the decision to cease underwriting certain lines of business in 2019 and 2020, the Syndicate had been considering options to manage those lines of business appropriately. Having focused initially on the former UK Property and Casualty business, the managing agent, on behalf of the Syndicate, sought permission from Lloyd’s and the PRA to enter a Split Reinsurance to close (RITC) contract on its 2019 and prior years of account reserves for that business. The contract covers business not transacted through the Xchanging bureaux system. This contract was executed on February 18th 2022, effective from January 1st 2022.

The Syndicate simultaneously entered into a 100% quota share contract for the 2020 year of account reserves in the same lines of business, in preparation for a similar split RITC transaction in 2023.

The value of liabilities reinsured under the RITC as at December 31st 2021 (net of related debtor balances transferred) was £187.3 million (about 12% of net assets).

KPI

£m 2021 2020
GWP 1,339.7 1,370.0
NWP 952.4 975.8
NEP 962.3 1,271.9
Claims Rat 59% 76%
Exp Rat 43% 43%
Comb Rat 102% 119%

Gross written premiums in 2021 decreased to £1,339.7m (2020: £1,370.0m), a reduction of 2.2%. This was driven by the impact of a strengthening of Sterling and the underwriting strategy review. Net earned premiums decreased by £309.5m to £962.4m (2020: £1,271.9m) for the same reasons,

The loss impact of Covid-19 had been experienced across a number of classes, including the discontinued UK P&C classes for business interruption claims. The Syndicate said that its assessment of the number of classes impacted had not materially changed over the past 12 months. The Syndicate said that the UK Supreme Court ruling issued on January 15th 2021, reflecting the benchmark case on policy wordings, “brought a degree of certainty to many, but not all, matters relating to coverage of this extremely unusual event and enabled the settlement of many of those claims as the insureds quantified their claims in line with the court judgement”.

As of the end of 2021 the Syndicate had settled 3,435 claims of 4,343 notified of UK business interruption claims notified, totalling £104.8m.

In terms of Covid-related losses, the Syndicate has recorded gross best estimate losses of £299.6m (2020: £229.0m) and £137.2m net (2020: £136.0m) as of December 31st 2021.

The Syndicate noted that 2021 saw a large number of natural catastrophe events, estimated to be within the top five most costly ever for insured losses. It recorded net loss reserves (net of reinstatement premiums) of £84.0m in 2021. This included exposure to the Uri Texas freeze, European Floods, Hurricane Ida and US Tornadoes. These events exceeded the Syndicate’s loss expectations for this type of event and contributed 9% to the loss ratio in 2021 (2020: 7%).

Referring to recent events, the Syndicate said that it had some limited insurance exposure to the Ukraine-Russia conflict, primarily through its crisis management, contract frustration, political risks and war lines of business. It said that management was monitoring actively the situation and assisting policyholders where possible. The Syndicate’s investment portfolios had insignificant exposure to Ukrainian and Russian assets.

Segmental Analysis

2021 £000s GPW GPE GCI NOE Reins. Bal Total Net tech prov Comms on GPE
Direct MAT 157.2 164.6 (80.1) (53.5) 1.1 32.1 374.9 (34.3)
Total Direct 773.2 775.5 (528.8) (240.7) 14.0 20.0 1,630.4 (177.7)
Reinsurance 566.5 573.6 (378.4) (170.8) (64.3) (39.9) 1,102.4 (99.4)
Total 1,339.7 1,349.1 (907.2) (411.5) (50.3) (19.9) 2,732.8 (277.1)
2020 £000s GPW GPE GCI NOE Reins. Bal Total Net tech prov Comms on GPE
Direct MAT 191.1 222.4 (94.1) (79.6) (20.8) 27.9 409.1 (65.3)
Total Direct 775.6 1,031.4 (678.7) (347.2) (54.7) (49.2) 1,916.6 (295.9)
Reinsurance 594.4 701.6 (687.4) (193.8) (11.3) (190.9) 1,088.4 (88.9)
Total 1,370.0 1,733.0 (1,366.1) (541.0) (66.0) (240.1) 3,005.0 (384.8)

The active underwriter (2020: five active underwriters) during the year received the following remuneration charged as a Syndicate expense for the period they were appointed:

£000s 2021 2020
Salaries 898 1,461
Pension 100
Termination benefits 1,800
Total 898 13,361

https://assets.lloyds.com/media/4008c1e4-79b0-4229-8a90-4e960cce660c/SRA2001c.pdf