AM Best has downgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “a” (Excellent) from “a+” (Excellent) and affirmed the Financial Strength Rating (FSR) of A (Excellent) of global reinsurer MS Amlin AG (MS Reinsurance).
The outlook of the Long-Term ICR has been revised to stable from negative, whereas the outlook on the FSR is stable.
AM Best states that the downgrade of the Long-Term ICR reflects a deterioration of the firm’s risk-adjusted capitalisation to the very strong level, as measured by Best’s Capital Adequacy Ratio (BCAR), due to multiple years of operating losses combined with recent strong premium growth.
The rating agency notes that whilst risk-adjusted capitalisation is expected to recover moderately over the medium term, it expects it to remain at a lower level than it was historically.
AM Best writes, “MS Amlin AG’s underwriting profitability has been under pressure, demonstrated by a five-year (2017-2021) weighted average combined ratio of approximately 110% (including a combined ratio of 123% in 2021).
“However, underwriting results were marginally positive in 2022, and are expected to continue to improve as a result of corrective actions taken by the company’s new management team.
“The company’s profile benefits from its relationship with its ultimate parent, MS&AD, and its recent rebranding to MS Reinsurance further strengthens its association with the MS&AD group.”
MS Reinsurance is the trading name of MS Amlin AG, which is still the risk-carrying legal entity.
According to AM Best, these Credit Ratings reflect the firm’s balance sheet strength, which it assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).