This annual Financial Condition Report (FCR) for the year ended 31 December 2023 was prepared for MS Amlin AG, trading under the name MS Reinsurance (‘the Company’ or ‘MS Reinsurance’).
MS Reinsurance is a Switzerland-domiciled, global reinsurer, and a wholly owned subsidiary of Mitsui Sumitomo Insurance Company, Limited (MSIJ), a part of MS&AD Insurance Group (MS&AD or the Group). Both MSIJ and MS&AD are registered in Japan. In 2022, MS Amlin AG was rebranded and now trades as “MS Reinsurance” with no change to its legal name or operational structure.
MS Reinsurance provides non-life treaty reinsurance solutions for clients around the world. The Company maintains a global presence with underwriting offices in Bermuda, Miami, New York, and Zurich along with a service center in Labuan.
Basis of preparation
This Financial Condition Report was prepared in compliance with the requirements of Art. 111a of the Insurance Supervision Ordinance (ISO; SR 961.011) and as further detailed in the Swiss Financial Market Supervisory Authority’s (FINMA) “Circular 2016/2: Disclosure – insurers.” 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 2024 Swiss Solvency Test’s (SST) Market Consistent Balance Sheet” (for balance sheet financial information) and the “2023 Swiss Code of Obligations Annual Report” (for profit or loss information). Both were prepared in accordance with their relevant regulatory or accounting standards. Unless stated otherwise, this report represents the Company’s position as of 31 December 2023 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 three business units:
- International, which provides multi-line solutions for clients in Europe, Middle East and Africa, and the rest of the world;
- Americas, which offers multi-line solutions for clients in North and South America; and
- Specialty Lines, which services clients with unique specialized risks such as credit or agriculture.
MS Reinsurance’s longer-term strategy to reduce volatility in financial results remains unchanged from 2022. The Company continued to rebalance the overall portfolio during 2023 with reductions in catastrophe exposure relative to other classes of business.
Corporate governance and risk management
The Company is supervised by a two-tier board, in accordance with Swiss legal and regulatory requirements. The first tier is the Supervisory Board of Directors (Supervisory Board), consisting of non-executive directors, of which at least one-third are independent of the Company.
The Executive Board comprises the second tier and is the Company’s managing body consisting 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.
The Supervisory Board sets forth the responsibilities and principles pertaining to the Company’s risk management. The 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 adherence to applicable frameworks. Further information on risk management is provided in section 5.2.
Performance
As of 31 December 2023, the Company reported a net profit of USD 308.7 million (2022 net loss: USD 177.6 million) under Swiss Code of Obligations (Swiss CO). Profits were driven by favorable non-cat experience across the portfolio, equity returns in line with the strong market performance and higher than planned returns on liquid assets driven by increased interest rates. Further information on performance is provided in section 3.
Valuation for solvency purposes
The MS Reinsurance SST 2024 Capital Ratio, described in detail in section 7, is 191%, compared favorably with the minimum FINMA SST solvency requirement of 100%. The market value margin is USD 163.9 million. The target capital is USD 1,058.4 million, and the SST risk bearing capital is USD 2,026.5 million. Please note that the SST 2024 is filed with FINMA in April 2024, 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 continues to be the main source of risk. Overall reserve volumes have grown during 2023, reflecting a growing volume of long-tail business and overall business growth.
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 CO of USD 1,699.6 million compared to USD 2,026.5 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 24 April 2024.