Amlin: Leadenhall Capital Partners strengthens our client proposition

Amlin plc, the non-life insurance and reinsurance group, believes it has avoided the worst of the softening rate environment thanks to its relationship with insurance-linked securities (ILS) and reinsurance-linked investments manager Leadenhall Capital Partners LLP.

Amlin, which holds a stake in ILS specialist manager Leadenhall Capital Partners, has increasingly made the relationship a focus of its financial reporting over the last few years, saying recently that it wanted to develop the synergies between the two firms further.

This continued development of the relationship appears to be paying dividends, according to Amlin’s interim management statement which it published this morning, helping the insurer and reinsurer to ward off the worst effects of the highly competitive market and increasingly soft reinsurance rate environment.

Amlin recognises the increasing amount of competition across a number of business lines, citing catastrophe reinsurance as the most notable area. However the firm feels it is coping well under a difficult market environment, growing its catastrophe reinsurance gross written premiums by 3.7% in the first-quarter of 2014.

The softening reinsurance market is evident in Amlin’s results, however. The firm recorded an average renewal rate decline of 8.8% with its U.S. catastrophe renewal rates falling by an average of 10.3% and its international catastrophe renewals seeing average rate decreases of 7.3%.

Amlin believes that the rate decreases it suffered are lower than the wider market has experienced and the reason it believes it has coped better in the competitive market is the relationship with Leadenhall Capital Partners. Amlin cites the; “Combination of Amlin’s highly respected traditional reinsurance offering with that of Leadenhall Capital Partners which has strengthened Amlin’s client proposition.”

The result of this strengthening that Leadenhall provides is that Amlin has been able to achieve preferential signings on renewals, gained access to reinsurance business which is not available on the open market and, on some business, even better pricing.

Amlin said that it will continue to further develop the synergies between Leadenhall Capital Partners and its own reinsurance business.  Amlin expects that Leadenhall’s growth, and its ability to supplement Amlin’s reinsurance capacity with collateralized alternatives and potentially lower-cost capital, will help it to grow its share of the global reinsurance market.   Leadenhall Capital Partners had insurance linked funds under management of $1,637.5 million (up from $1,603.4 million at the 31st December 2013).

Charles Philipps, Amlin’s Chief Executive, commented on the firms first-quarter; “The first quarter of 2014 has demonstrated that Amlin remains well-positioned in a mixed trading environment. We continue to benefit from the strength of our reinsurance franchise and our partnership with Leadenhall Capital, which are creating new opportunities for Amlin as the market evolves. Elsewhere, the quality and diversity of our portfolio and our investment in broadening the footprint of Amlin’s business, continue to offer scope for long-term profitable growth.”

The importance of having a unit managing third-party or ILS capital is increasing for reinsurers. Those who were early to this game, such as Amlin, are now reaping the benefits in the challenging market environment. With no sign of these market conditions letting up, the important contribution ILS managers like Leadenhall will make to their re/insurer partners will grow as they add increased flexibility and efficiency at renewal time.

Find out more about Leadenhall Capital Partners LLP in the Artemis ILS Fund Managers Directory.