MS Amlin shake-up comes to Asia

February 7 2020 by Nick Ferguson

MS Amlin’s change of leadership in Asia comes at a time when the company is refocusing its underwriting strategy and reorganising its business.

Will Ho is taking over from Simon Clarke, who has been chief executive in Asia Pacific for more than 10 years. Ho has been running the Asian reinsurance business for the past five years after moving to Singapore from London.

It is perhaps no surprise that MS Amlin has promoted from the reinsurance side of the business given the relative underperformance of the Lloyd’s unit. MS&AD bought Amlin in 2016 for 2.4 times its book value, but since a business review in September last year it has basically written off all of the premium it put on the Lloyd’s and European primary insurance businesses.

“The decision to place these classes into run-off will enable us to focus on our core markets,” Tom Clementi, MS Amlin

This goodwill impairment, which did not affect the reinsurance business, is partly due to significant losses on general lines, in addition to the effect of natural catastrophes such as hurricanes and wildfires, but is also a recognition of the fact that it overpaid for the company in the first place.

It has been accompanied by a reorganisation that puts MS Amlin’s three units under the direct ownership of Mitsui Sumitomo Insurance (MSI) instead of MS Amlin plc, which has been dissolved as of January 1. The reorganisation also involves the removal of the regional holding company framework across Asia, Europe and the US.

The new structure comprises MS Amlin Underwriting, the Lloyd’s arm, led by Tom Clementi; MS Amlin, the reinsurance business, led by Chris Beazley, who previously set up the Singapore operation; and MS Amlin Insurance, the European primary business, under the interim leadership of Rudy Benmeridja. Simon Beale, the former chief executive of MS Amlin plc, has stepped down but remains at the company.

“The recent reorganisation of our international business will actually be carried out to globally utilise MS Amlin’s talented personnel acquired in this way.” MS Amlin statement.

In the UK, this reorganisation has also resulted in several property-casualty classes being placed into run-off, namely corporate property, real estate, casualty and package binders, with effect from January 31; the firm also exited aviation.

“The decision to place these classes into run-off will enable us to focus on our core markets,” said Clementi.

Asia
Part of the logic for the US$5.3 billion valuation of Amlin was the geographic benefit that could be extracted from combining MS&AD’s strong Asian footprint with Amlin’s presence in Europe and the US.

In the rush to escape its shrinking home market in Japan, MS&AD clearly overvalued the scale of that opportunity in the medium term, but Asia will undoubtedly continue to form an important part of MS Amlin’s future.

MS Amlin reorganised its Hong Kong office last year and exited reinsurance in India.

“MS Amlin is a company with many very talented employees, and we believe that the company’s platform for world-class insurance … was solidified through the acquisition,” the company said in a summary of its conference call with investors as part of the second-half results announcement.

It added: “The recent reorganisation of our international business will actually be carried out to globally utilise MS Amlin’s talented personnel acquired in this way.”

MS&AD has a presence in all 10 South-East Asian markets, all the Greater China markets, South Korea, India and Sri Lanka. The MS Amlin business in Asia currently contributes less than 20% of its total gross written premiums, while at the group level, MSI earns about a third of its international premiums (and the vast majority of its profits) in this part of the world.

Going forward, MS&AD seems to be committed to more of a hands-on approach to the Amlin business and a more concerted effort to unlock the potential synergies of running the whole group as a single, coherent business. A lot is riding on whether it can pull that off.

 

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