Insurance-linked securities (ILS) and reinsurance-linked investment manager Leadenhall Capital Partners has helped Amlin plc to increase its property catastrophe business underwritten, as the partnership continues to enhance the non-life re/insurers position.
Amlin, the London-headquartered non-life insurance and reinsurance business, recently increased its ownership stake in ILS and reinsurance-linked investments manager Leadenhall, taking its stake to 75% in the firm. The synergies between the two continue to build and are perhaps even more evident in a challenging, softer reinsurance market environment as we see today.
One example is the fact that Amlin has increased its property catastrophe premiums written in 2014 to date, despite the softer and more challenging market environment. The lower-cost of ILS capital supplied by Leadenhall is no doubt a contributing factor to the firms ability to effectively navigate the market and to increase its lines on the most attractive business.
Amlin reported this morning that it has increased its property catastrophe reinsurance premiums underwritten with the help of Leadenhall. The firm said; “Amlin’s strong client proposition, enhanced by Leadenhall Capital Partners, has enabled Amlin to achieve modest growth of 5.3% with a focus on those areas where pricing meets hurdle rates of return.”
Amlin also appears to have been able to avoid the worst of the market softening as it reports an average renewal rate decrease over the course of 2014 in property cat of 8.2%, which as an average is not that bad considering much of the market is down in double figures.
Charles Philipps, Amlin’s Chief Executive, commented on Amlin’s progress for the first nine months of 2014; “We are pleased with our progress to date in 2014 and are confident that we can continue to deliver healthy returns for shareholders. Against a backdrop of intensifying competition as a result of increasing industry capital, we have successfully maintained underwriting discipline while making good progress in building a more diversified business which is better suited to meeting the challenges of the current environment.”
Amlin now owns a 75% stake in Leadenhall, with the remaining 25% owned by the individual founders and partners in the ILS specialist. Leadenhall now manages $1.8 billion across three funds and managed accounts, a number it will be seeking to grow.
The stake in an ILS manager is seen as accretive to Amlin’s success. With most other reinsurers now also operating third-party reinsurance capital units or vehicles, some with mixed success to date, Amlin is a prime example of how the relationship between multiple types of capital can be a benefit to an organisation.
“ILS has grown materially over recent years, particularly in reinsurance, and Amlin is one of only a few (re)insurers to have an aligned business in this area. Significant synergies have already been developed between LCP and Amlin’s reinsurance business, and the increased stake provides both businesses with a valuable strategic advantage,” Amlin’s statement this morning explained.