MS Reinsurance receives upgraded ratings

MS Reinsurance receives upgraded ratings | Insurance Business Australia

Reinsurance

MS Reinsurance receives upgraded ratings

What’s behind the positive development?

Reinsurance

By
Kenneth Araullo

AM Best has elevated the financial strength rating of MS Amlin AG (MS Reinsurance) to A+ (Superior) from A (Excellent) and upgraded the long-term issuer credit rating to “aa-“ (Superior) from “a” (Excellent), with a stable outlook for these ratings.

A key factor in the rating upgrades is the added support from Mitsui Sumitomo Insurance Company, Limited (MSI), which includes a recent parental guarantee. MS Reinsurance operates as a direct subsidiary of MSI, a principal subsidiary within the MS&AD group.

The upgraded ratings also reflect the robust balance sheet of MS Reinsurance, characterized by AM Best as very strong, alongside its satisfactory operating performance, neutral business profile, and adequate enterprise risk management.

The financial stability of MS Reinsurance is bolstered by its very strong risk-adjusted capitalization, as evidenced by its performance in AM Best’s Capital Adequacy Ratio (BCAR) for 2022 and 2023. Despite a decline in BCAR scores in recent years due to operating losses and robust premium growth, AM Best notes that the scores are anticipated to improve moderately and maintain at least a very strong level.

With new management appointed in 2020, MS Reinsurance has implemented a series of corrective actions aimed at enhancing underwriting performance and reducing portfolio volatility. These strategic measures have included scaling back catastrophe exposure and discontinuing underperforming accounts.

The effectiveness of these actions was evident in 2023, when MS Reinsurance reported a combined ratio of 96%, according to AM Best’s calculations based on Swiss Code of Obligations figures, or around 90% under International Financial Reporting Standards (IFRS).

Moving forward, AM Best says that MS Reinsurance is expected to continue reporting profitable and less volatile underwriting results.

Elsewhere for the reinsurer, MS Reinsurance has also recently named Andy Hottinger as the new head of property and casualty (P&C) for the Europe, Middle East, and Africa (EMEA) regions.

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