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Munich Re simplifies at Lloyd’s, sells MSP Underwriting to Cincinnati Financial


Global reinsurance giant Munich Re is to simplify its operations in the Lloyd’s of London market by selling its MSP Underwriting business which operates through Beaufort Underwriting Agency Limited and underwrites for Lloyd’s Syndicate 318, to U.S. re/insurer Cincinnati Financial Corporation.

The move will leave the reinsurer with its own branded Lloyd’s platform, Munich Re Syndicate Ltd., which the company says will enable it to be more focused in the Lloyd’s market.

For Cincinnati Financial it marks the firms first foray into Lloyd’s and the London insurance marketplace, which will add significant opportunities for diversification.

The transaction will see Munich Re selling MSP Underwriting for £102 million in an all-cash deal, based on MSP Underwriting’s projected net asset value at the closing.

The deal has been approved by Cincinnati’s board of directors and is hoped to close in the first quarter of 2019. After the close MSP Underwriting is expected to still operate under its own brand and with the same leadership team in place, meaning business as usual for its clients.

Commenting on the sale, Peter Röder, member of the Board of Management of Munich Re, said, “Cincinnati Financial is perfectly suited for enhancing MSP Underwriting’s business and we are looking forward to seeing the company prosper within Cincinnati Financial. After the sale, Munich Re will have a focused and less complex set-up in order to drive profitable growth within the Lloyd’s market, instead of running two platforms in parallel. We remain committed to the Lloyd’s market, and will continue to grow the business within Munich Re Syndicate Ltd.”

MSP Underwriting and Beaufort Underwriting Agency Limited, writing through Lloyd’s Syndicate 318, underwrote roughly £153 million of gross written premiums in 2017, largely in property and aviation classes of business. The business has generated an underwriting profit in 20 out of the last 24 years and its plans are for targeted expansion into new classes of business over the coming years.

Steven J. Johnston, president and chief executive officer at Cincinnati Financial commented, “Adding MSP Underwriting to the Cincinnati family brings experienced underwriters who we believe will open opportunities for us to support our agents in new geographies and lines of business. And, it complements our existing large commercial account, excess and surplus lines, high net worth personal lines and reinsurance assumed growth initiatives.

“Munich Re is a longtime and valuable reinsurance partner. We are pleased to work with them through this transaction. MSP’s size allows us to follow our proven strategy of building successful insurance businesses over time – just as we have with our excess and surplus lines subsidiary and our reinsurance assumed business.”

The transaction  is expected to add diversity for Cincinnati Financial and generate an attractive return over time for the firm, while for Munich Re this simpler approach to operating at Lloyd’s under its own brand is perhaps better aligned and provides the reinsurance firm with more flexibility to upsize, or indeed downsize, its activities there.

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