AM Best has affirmed the Financial Strength Ratings of A (Excellent) and the Long-Term Issuer Credit Ratings of "a+" of MS Amlin AG (Switzerland), and Lloyd's Syndicate 2001 (Syndicate 2001) (United Kingdom), which is managed by MS Amlin Underwriting Limited. The outlook of these Credit Ratings (ratings) remains stable.
MS Amlin AG's ratings reflect the company's balance sheet strength, which AM Best categorises as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM). In addition, the ratings benefit from enhancement due to the support of MS Amlin group's ultimate parent, MS&AD Insurance Group Holdings, Inc. (MS&AD).
Syndicate 2001's ratings reflect the balance sheet strength of the Lloyd's market, which AM Best categorises as very strong, as well as its strong operating performance, favourable business profile and appropriate ERM. The Lloyd's market rating is the floor for all syndicate ratings, reflecting the Lloyd's chain of security, and, in particular, the role of the Central Fund, which partially mutualises capital at the market level.
MS Amlin AG is a mid-tier reinsurer with gross written premiums of USD 1.3 billion in 2018. The company's market position and brand benefit from its association with Syndicate 2001 and MS&AD. Syndicate 2001 is one of the largest Lloyd's syndicates, with a capacity of GBP 1,850 million for the 2019 year of account (unchanged from 2018). MS Amlin AG and Syndicate 2001, which account for the majority of MS Amlin group's business, write a diversified book of property/casualty, marine/aviation and reinsurance business.
MS Amlin AG's balance sheet strength is underpinned by its strongest risk-adjusted capitalisation, based on Best's Capital Adequacy Ratio (BCAR) as at year-end 2018. The capital position is subject to volatility, due to exposure to high-severity losses. Nevertheless, AM Best expects that the company will maintain the strongest level of risk-adjusted capitalisation, supported by MS&AD, if required. MS Amlin AG's ratings consider the company's strategic importance to MS&AD as the group's principal international reinsurer.
In 2018, both MS Amlin AG and Syndicate 2001 were unprofitable, largely due to losses from catastrophe events. Results were also dampened by higher-than-expected large loss occurrence and adverse attritional experience. However, the size of reported underwriting losses was lower in comparison with the prior year, with MS Amlin AG and Syndicate 2001 recording combined ratios of 106% (2017: 130%) and 111% (2017: 141%), respectively, as calculated by AM Best. Strategic portfolio remediation has been underway across the MS Amlin group to address the unfavourable attritional experience and will continue over the near term. As part of this, some lines of business were discontinued or had their capacity reduced in 2018. In addition, a number of actions were undertaken to reduce uncertainty around the prior year loss reserves. In particular, the group purchased an adverse development cover in respect of the 2018 and prior years' earned business.
This press release relates to Credit Ratings that have been published on AM Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best's Credit Ratings. For information on the proper media use of Best's Credit Ratings and AM Best press releases, please view Guide for Media Proper Use of Best's Credit Ratings and AM Best Rating Action Press Releases
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