MS Amlin sees Phoenix 1 Re sidecar as core to Asia strategy: ILS Asia 2021

Re/insurer MS Amlin intends to renew its novel Phoenix 1 Re reinsurance sidecar and expects the vehicle to become an important component of its strategy in the Asia region, according to William Ho, Chief Executive Officer (CEO) of MS Amlin Asia Pacific, and Head of Reinsurance for Asia, MS Amlin.

The penultimate day of our virtual ILS Asia 2021 conference, held in association with our headline sponsor AM RE Syndicate Inc., kicked off with a keynote interview focused on the development of the Asian reinsurance market from the view of a cedent, Ho from MS Amlin.

This discussion can now be viewed on-demand here.

After discussing market firming and reinsurance renewal trends both broadly and in Asia, Ho commented on the growth of ILS in the Asia region and the efforts of Singapore and more recently Hong Kong to support this growth.

The conversation then turned to MS Amlin’s Phoenix 1 Re collateralised reinsurance transaction, which is the first sidecar to be solely focused on Asian property catastrophe risks.

Based in Singapore, the sidecar provides reinsurance capacity to support MS Amlin Syndicate 2001’s Asia specific catastrophe reinsurance portfolio, via its Singapore domiciled underwriting platform.

Commenting on the sidecar, Ho said, “We were very pleased to be able to create this sidecar and be a first for it as well.”

For a first time sponsor entering the ILS market challenges exist and this was no exception for MS Amlin. According to Ho, one of the main challenges concerned modelling and the fact that when compared with more mature markets, modelling in many parts of Asia is certainly less granular.

“There’s a number of non-modelled perils as well in the region,” continued Ho. “So how do we align that when the ILS space is quite a data driven environment and quite a model driven environment, against the peak zone areas.

“So it really was a case of bringing more transparency to our underwriting, bringing more transparency to our approach, trying to engage in how we understand the different markets and be willing to take it step by step with the interested parties to be able to let them see our perspective, let them see how our business runs.”

Ho went on to explain that within the transaction, it’s more or less a broad section of the book that was ceded, although the firm did decided to keep it at a more remote risk area.

“We picked an area of our portfolio where the capacity would have benefits for us to be able to leverage this additional capacity to position ourselves stronger, but also a fine balance to ensure that this would keep the results as stable as possible,” said Ho.

While the transaction was a bit more remote it is a broad part of the portfolio (APAC region minus some of the peak zones) and as such, is truly diversifying for investors, who responded positively to the transaction.

“It was a pleasant surprise to see the interest levels. And even certain conversations ended up being, we like this but we can’t find the funds to match it. There was still quite a bit of interest in knowing a bit more and I certainly found that quite a positive reaction to something like this

“But to the investors that we did manage to get on board, that’s relatively a global spread. But I’d also add, 50% of our capacity or our investor base are based in the APAC region, which is quite a positive outcome as well,” said Ho.

Looking forward, Ho explained that this is “very much a long term play” and in order to cultivate relationships, MS Amlin is approaching this from a perspective of wanting its investors to almost be partners.

“We want to build on this as well. I think it’s a matter of time before more ILS capacity comes into the region, hopefully at the same time as a number of key markets start fulfilling their potential in the reinsurance space.

“And this is really done with an aim to ensure that we’re well positioned, both MS Amlin themselves, but with our investor partners to really take advantage of the market when it does reach its potential,” said Ho.

Adding, “It’s very much strategic and we’re looking for it to be part and parcel of our strategy in the Asia region. I think MS Amlin Asia Pacific will want to have third party capital partners to be able to go and help us execute our underwriting objectives and strategy in the future.

“In terms of how long, certainly if all conditions are right and the market conditions show more positive growth, then we definitely will be looking to renew it. We’ve put it through the MAS ILS grant scheme. It will be a couple of years yet as we established a three year deal for Phoenix 1.

“But that said, we’re working already on what are the next steps. And not only is it just to help establish and try to align with our future strategic growths, it’s more engaging as well with, and keeping our investors informed of how this region is developing and delivering on that transparency and joining us on the underwriting journey to achieve a successful story for both sides.”

You can watch this session of ILS Asia 2021 on-demand here.

As well as the on-demand playback, we will be archiving every session from our online and virtual ILS Asia 2021 conference over on our YouTube Channel in the coming weeks and audio versions will also be uploaded to our podcast which you can subscribe to here.

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