The syndicate – one of the largest in the Lloyd’s market – reported a combined ratio of 99.9%, breaking a six-year streak of underwriting losses.
“MS Amlin is on its way back,” Carrier told Insurance Insider in an exclusive interview. “We're not there yet. But we think we've got enough metrics now to see that we’re on track. And I'm feeling good about that.”
Carrier took over the reins at the Lloyd’s arm of MS Amlin from Johan Slabbert in December 2022, following a multi-year period of remediation, operational and cultural overhaul, and management change.
That remediation sought to correct deep-rooted challenges in the portfolio, and has included the exit of nine business lines, a cost-cutting drive, and two legacy deals to address prior-year reserve deterioration.
The failings of governance during the years of 2014-2019, under previous management, were underlined by a £9.7mn PRA fine issued to the company in October 2022.
Carrier noted that the drag from discontinued lines was still evident in the 2022 result, but said that in 2023 that impact should be eradicated thanks to the £1.2bn legacy deal struck with Riverstone.
Meanwhile, 2022 also saw property losses from Hurricane Ian and political violence losses from Ukraine, the CEO said, noting that MS Amlin is a leader in those two classes.
“We didn't have any losses that were outsized or surprises,” he said, adding: “When I look at our result, for me, it's a confirmation that everything we're doing is moving us in the right direction.”
Carrier said remediation on the loss ratio is largely complete, though there was more “intrusive work” to be done on bringing down the expense ratio, which in 2022 stood at 46.4%.
While there is certainly more to do on right-sizing acquisition costs, on admin costs, “we probably have greater reliance on manual processes than a syndicate of our size should have or does have elsewhere in the market,” he said.
“So it's finding some of those common-sense efficiencies and use of technology, and probably greater use of outsourcing where there are cheaper ways to run the admin processes that support our business.”
Syndicate 2001 also registered top line growth for the first time in three years, having slashed premium by more than 40% between 2018 and 2021.
Gross written premium for the year totalled £1.58bn, up 18% from £1.34bn in 2021. Carrier said the syndicate would grow again in 2023, although it would be driven predominantly by rate rather than exposure.
“Having done the remedial work and reshaped our portfolio into the size we want it to be by product and geography, it's now largely for 2023 to grow on rate improvement, there is no significant upscaling or downscaling by product.”
In approximate terms, MS Amlin planned for five points of rate improvement and achieved 15 points, Carrier said. “That really helps the wind in our sails.”
Addressing the volatility in the former MS Amlin book was a major part of the remediation work, with changes in reinsurance buying made to address severity, and the property book diversified away from North American peak cat risk with the addition of international business.
Market dislocation in both property cat reinsurance and commercial property has created fresh opportunity in London, but Carrier said his firm would continue to be selective in writing cat risk.
“We were overweight lower down at the near-term frequency levels. That was where we've done most of our remediation, and that probably had the biggest impact in where our premium volumes sat in the broader property cat portfolio.”
Carrier said the current market conditions in property “certainly feel as strong” as what was seen in 1993 and 2002.
“I would say we are nicely positioned now to take some advantage of the significantly improving property cat space,” Carrier stated.
“That's not to say I anticipate we're going to open our shoulders, but we have enough pockets of dry powder for us to shape our portfolio nicely with all the opportunities we see.”
MS Amlin prefers to deploy its cat aggregate in the treaty market rather than on the property binder side, Carrier explained, with its property D&F “somewhere in the middle”.
He continued: “We don't mind volatility as long as it's managed, and above all as long as it's compensated.” He said that there is no difficulty in finding those pockets of adequately priced cat business in the current market.
Speaking more widely, Carrier said insureds were facing a far more uncertain environment than ever in terms of risk levels.
“There is a multi-dimensional nature to the uncertainty we're seeing,” he said. “It's not just in climate change or even geopolitical uncertainty, but even the financial markets look considerably less predictable than they did a month ago.
“Our customers need that risk addressing and we're in the market of helping contain that risk. As long as we are positioned appropriately to be able to react to those opportunities, MS Amlin is in a better place to be able to do that, than it has been for many years.”
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