This annual Financial Condition Report (FCR) for the year ended 31 December 2022 has been prepared for MS Amlin AG (the Company or MS Reinsurance). In 2022, MS Amlin AG was rebranded and is now trading as “MS Reinsurance, an MS Amlin AG company” without impacting its legal name or operational structure. MS Reinsurance is a Switzerland-domiciled global reinsurer and a wholly owned subsidiary of Mitsui Sumitomo Insurance Company, Limited (MSI), a part of MS&AD Insurance Group Holdings, Inc. (MS&AD or the Group). Both MSI and MS&AD are registered in Japan.
Basis of preparation
This Financial Condition Report has been prepared in-line with the requirements as set out in the Swiss Financial Market Supervisory Authority’s (FINMA) “Circular 2016/2: Disclosure – insurers”. The circular expands on Articles 111a and 203a of the Insurance Supervision Ordinance (ISO; SR 961,011) on the FCR of supervised insurance companies, groups, and conglomerates. This FCR is to meet the regulatory reporting requirements of MS Reinsurance and for no other purpose and should not be relied upon for any other such purpose.
Financial information included in this report is based on data from “MS Reinsurance’s 2023 Swiss Solvency Test’s (SST) Market Consistent Balance Sheet” (for balance sheet financial information) and the “2022 Swiss Code of Obligations Annual Report” (for profit or loss information). Both have been prepared in accordance with their relevant regulatory or accounting standards. Unless stated otherwise, this report represents the position of MS Reinsurance as of 31 December 2022 only and will not necessarily reflect all changes in MS Reinsurance’s operations since that date. All quantitative information in this report is disclosed in USD, MS Reinsurance’s presentational currency, unless otherwise specified.
Business activities
MS Reinsurance has a global underwriting strategy prioritizing long-term client portfolios serving a variety of reinsurance clients facilitated across four underwriting offices:
- Zurich, Switzerland. Operating from the company’s headquarters, this platform predominately writes EMEA (Europe, Middle East and Africa) business across all lines.
- Hamilton, Bermuda. This platform primarily focuses on property, casualty, financial, and specialty lines in both the USA and international markets.
- United States. The Miami and New York offices of the Company’s subsidiary MS Amlin Reinsurance Managers, Inc (“MS ARMI”), which was acquired from MS Amlin Underwriting Limited in 2021, write business on behalf of MS Amlin AG, Zurich, based on binding authorities. Miami is focused on Latin American property, credit and surety, and accident and health business, while the team in New York is primarily focused on USA motor and general liability business.
The overall portfolio continued to be rebalanced during the year with reductions in catastrophe exposure relative to other classes of business as part of a longer-term strategy to reduce volatility in financial results.
Corporate governance and risk management
The Company is supervised by a two-tier Supervisory Board, in accordance with Swiss legal and regulatory requirements. The Supervisory Board consists of non-executive directors of which at least one-third are independent of the Company.
The Executive Board is the Company’s managing body and consists of the chief executive officer (CEO) and other senior officers and managers of the Company. Appointments to the Executive Board are at the discretion of the Supervisory Board. Further information on corporate governance is provided in section 5.1.
MS Reinsurance’s risk management function is embedded throughout the Company and is an integral part of the business model. Risk management is mandated to ensure that the organization has the necessary expertise, frameworks, and infrastructure to support acceptable risk-taking. The risk management function also monitors and ensures adherences to applicable frameworks. Further information on risk management is provided in section 5.2.
Performance
As of 31 December 2022, the Company reported a net loss of USD 177.6 million (2021 net loss: USD 272.8 million). Losses were a result of several key drivers: ongoing conflict in Ukraine impacting both the political violence portfolio and Intercompany Quota Share agreements, catastrophe losses in Australia and the USA, the inclusion of a specific inflation consideration in the best estimate reserves at year-end 2022, and unrealized losses from investments. Further information on performance is provided in section 4.
Valuation for solvency purposes
The MS Reinsurance SST 2023 Capital Ratio, described in detail later in this report, is 204%, which compares favorably with the minimum FINMA SST solvency requirement of 100%. The SST one-year risk capital is USD 854.9 million. The market value margin is USD 127.2 million. The target capital is USD 982.1 million, and the SST risk bearing capital is USD 1,868.5 million. Please note that the SST 2023 is filed with FINMA in April 2023, simultaneously to this document.
As described throughout this document, the MS Reinsurance SST target capital is dominated by insurance risk. Within insurance risk, reserve risk has now overtaken premium risk as the main source of risk. Overall reserve volumes have grown during 2022, reflecting a growing volume of long-tail business and the inclusion of a specific inflation consideration in the best estimate reserves at year-end 2022.
The relevant measure of available own funds is the risk bearing capital (RBC) calculated on the SST market consistent balance sheet. MS Reinsurance has net assets under Swiss Code of Obligation (Swiss CO) of USD 1,390.9, million compared to USD 1,868.5 million net assets based on SST market consistent balance sheet. The adjustments made to move from Swiss CO balance sheet to SST market-consistent balance sheet are set out below:
Approval of the Financial Condition Report
This report was reviewed and approved, and its disclosure pursuant to FINMA’s “Circular 2016/2: Disclosure – insurers” signed off, by the Supervisory Board of MS Reinsurance on 25 April 2023.