AM Best

AM Best Revises Issuer Credit Rating Outlook to Negative for MS Amlin AG; Affirms Credit Ratings


Barnaby Unwin Hoskins
Financial Analyst
+44 20 7397 6264

Tim Prince
Director, Analytics
+44 20 7397 0320

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Communications
+1 908 439 2200, ext. 5644


LONDON - FEBRUARY 23, 2022 11:54 AM (EST)
AM Best has revised the outlook to negative from stable for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of A (Excellent) and Long-Term ICR of “a+” (Excellent) of MS Amlin AG (Switzerland). The outlook of the FSR is stable.

These Credit Ratings (ratings) reflect MS Amlin AG’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM). In addition, MS Amlin AG’s ratings benefit from enhancement due to the support of its ultimate parent, MS&AD Insurance Group Holdings, Inc. (MS&AD).

The revision of the Long-Term ICR outlook to negative reflects pressure on MS Amlin AG’s adequate operating performance assessment, following weakening underwriting performance since 2017.

MS Amlin AG is expected to report a significant loss after tax for 2021, reflecting a combined ratio well in excess of 100%, only partially offset by investment income. The underwriting loss is mainly driven by elevated natural catastrophe losses and adverse development on the company’s COVID-19 and non-catastrophe reserves.

MS Amlin AG’s operating performance has been volatile in recent years, with return-on-equity ratios (ROE) ranging from in excess of 10% in 2018 and 2019 to -12% in 2017. In 2021, the company is likely to report another negative double-digit ROE. The company has implemented a number of corrective actions in 2021 and 2022 to strengthen underwriting performance. Should these actions fail to translate into sustainable underwriting profitability, a downgrade of the Long-Term ICR is likely.

MS Amlin AG’s adequate operating performance assessment reflects a track record of robust underwriting results and operating performance, demonstrated by a 10-year (2011-2020) weighted average combined ratio of 96.2% and a 10-year weighted average ROE of 6.3%. Poor performance over the period 2016-2020 resulted in weaker equivalent five-year metrics of 104.5% and 1.9%, respectively. These metrics are expected to deteriorate with the company’s 2021 results.

Despite the expectation of a sizeable loss for 2021, MS Amlin AG’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), is likely to remain comfortably at the strongest level. Adverse reserve development since 2017 has unfavorably impacted the company’s underwriting performance and balance sheet strength. Corrective actions, implemented in 2021 and ongoing in 2022, are expected to result in greater reserve stability.

MS Amlin AG is a mid-tier reinsurer operating in Bermuda, Zurich and the United States, with a market position and brand benefiting from its association with MS&AD. Whilst the company has significantly reduced its catastrophe exposures in recent years, product risk remains elevated, exposing the company to volatility in earnings and risk-adjusted capitalisation. Further reductions in catastrophe exposures are expected.

Poor underwriting performance over the period 2017-2021 highlighted weaknesses in the company’s underwriting and reserving risk management capabilities. MS Amlin AG’s ERM is expected to benefit from changes to its senior management team, including the appointment of a new chief executive officer, and remedial actions focusing on processes and controls for underwriting and reserving activities.

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 Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

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AMB# Company Name
078117 MS Amlin AG
052662 MS&AD Insurance Group Holdings, Inc.