The recent shift in ownership of London headquartered insurance and reinsurance linked investment manager, Leadenhall Capital Partners to Mitsui Sumitomo (MSI), enables the ILS manager to better utilise the full-potential of its resources and is a reflection of the group’s growth aspirations, according to Leadenhall’s CEO, Luca Albertini.
It was announced in early February that MSI had acquired an 80% stake in the specialist ILS manager from its fellow MS&AD company, MS Amlin. A move designed to expand Leadenhall’s ILS platform while enabling MSI to strengthen in the ILS world, which, it sees as an important component of its Financial Services Division.
In light of the change in ownership, Artemis spoke with Leadenhall CEO Albertini, who explained that while the firm sits at number seven on the list of top ten ILS managers, it’s the highest ranked reinsurer owned manager (apart from Nephila recently acquired by Markel), which, when compared with some of the larger players in the space has some disadvantages, especially when it comes to distribution.
“It’s the local presence, the local marketing sales forces that these big organisations have,” said Albertini.
“For a while I’ve been thinking that with the great partnership with MS Amlin, which definitely still brings a lot of synergies on marketing and execution of the inward business, if we can also build a strong link with one or two different asset managers on the investor side, that would be for me managing the best of both worlds.
“The way I see it is if you were only owned by an asset manager, probably you will be more interested on your AuM than on premium directions and things of that nature. If you are only owned by a reinsurer then there’s potential for a conflict of interest (which we manage well), and, you also miss all of the distribution,” he added.
MSI’s experience in insurance and reinsurance linked investing in Japan, coupled with its broad access into Japanese institutional markets, is expected to enhance Leadenhall’s presence in the region.
Since Leadenhall broke into the top ten ILS managers in the world, in terms of assets under management (AuM), it’s moved up the ranks at a steady pace, recently increasing its AuM to $5.5 billion, as at January 1st 2019.
“In the last four years we got into the top ten, then we got number nine, then we got eight, and then we got to seven, so we do have aspirations to take over the next guys, right. And, we were feeling that our current set-up wouldn’t have used the full-potential of the group’s resources,” said Albertini.
Despite the change in ownership, Albertini explained that Leadenhall is by no means walking away from MS Amlin, stating that actually the pair are working closer and closer together.
The cooperation with MS Amlin is as important now as it ever has been. As MSI own MS Amlin, it is also in their interest to make sure that everyone will be successful.
“If we add $2 billion to our AuM, MS Amlin is going to benefit from that because we will work on some of that extra $2 billion together,” said Albertini.
He reiterated the fact that logically, Leadenhall belongs in MSI’s Financial Services division, which has numerous relationships with various asset managers, including the asset management of its own capital, while MS Amlin better sits in the International Life and Non-Life division.
“Amlin is 99% non-life, whereas we have $3 billion of non-life and $2.5 billion of life, and actually we name our life an alternative credit because it is also a credit diversifier. The component that ties to MS Amlin is still there, but there is about half the group that is doing something else,” said Albertini.
Discussing the potential for new underwriting opportunities in Japan as a result of the ownership shift, Albertini said that the asset management will be the “engine of the growth,” while the relationship with individual producers of risk in Japan, “will actually help and allow us to deploy some of the new capacity so we can grow.
“And, actually, in Japan it is nice and diversifying capacity, so it’s quite interesting what we can do,” he said, adding that the firm hasn’t even started looking at opportunities on the life side or within the primary business.
The new ownership and continued yet strengthening ties with MS Amlin looks set to provide Leadenhall with the tools to expand its presence and influence in the Japanese market, ultimately helping the firm realise its growth aspirations and keep climbing higher up the ranks of global ILS managers.