MS Amlin’s Phoenix sidecar a stable investment opportunity: William Ho

Chief Executive Officer (CEO) of MS Amlin Asia Pacific, William Ho, in a recent video interview with our insurance-linked securities (ILS) focused sister publication, Artemis, discussed the re/insurer’s series of Phoenix sidecar transactions.

After renewing a quota share arrangement via reinsurance sidecar vehicle Phoenix 2 Re Pte. Ltd., MS Amlin, through its Singapore based subsidiary MS Amlin Asia Pacific Pte. Ltd., grew the size of coverage available from the sidecar program.

All in all, it was the fourth Phoenix Re collateralized and securitized sidecar transaction from the company, and the first renewal of a Singapore domiciled ILS structure, which is notable.

In light of this, Artemis, as part of its series of live video interviews, spoke with Ho about the firm’s innovative sidecar program, including the challenges and benefits, how investors should think about the structure, and what the future holds.

“We’re going into our fifth year now,” said Ho. “So, we’ve had four years of transactions on the trot. Looking back, we’ve raised over $160 million over that period of time, averaging between 8% and 9% return-on-capital. From an underwriters perspective, we ceded over $30 million of premium into these vehicles and generated less than a million dollars of losses.”

With the capital raised to-date, and having ceded more than $30 million of premium with under $1 million of claims over a four year period, Ho emphasised that MS Amlin feels that its Phoenix Re sidecar program is “a stable investment opportunity” for the ILS investor base.

In terms of how investors should view the unique Phoenix transaction, Ho noted the diversification within the portfolio from across the APAC region.

“We would put it as, it’s about 200 to 250 mini cat bonds put together. Each individual one would not have enough critical mass or size to warrant setting up going into the ILS market on its own. However, we’ve created a portfolio of mini cat bonds, a bit more remote-risk across the region,” said Ho.

“We’ve built that portfolio over the years and shaped that portfolio to our underwriting appetite. We can show that there’s a good track record there and it’s a quota share arrangement, so we take our fair share of the risk there as well,” he added.

During the interview, Ho also commented on the value of partnerships with investors for the company, and the strategy for the future with Phoenix.

“For our investors, we just need them to know we carefully select, underwrite and build a portfolio. It’s not transacting risk and passing it through. We want the investors, as I mentioned, to understand what we’re trying to do and align with our interests. We will explore this region with them. And the more exciting part there is the Asia markets, the different number of developing markets here, they’re forever evolving, they’ve changed a lot over the last 15 years and they will continue to change a lot over the next 15 years. And as and when that evolution occurs and those changes occur, that needs further capacity.

“We want to be front and foremost to be first to be able to access that increased demand in reinsurance and be able to use both our capacity and our investors capacity to go offer the right solutions to the clients,” explained Ho.

“We are looking to continue growing Phoenix, each year we’ve moved on a little bit more forward… We want our current investors to continue supporting us, and we welcome to have new conversations with some new investors that would like to know a bit more about it,” he said.

You can learn more about the Phoenix sidecar series from MS Amlin Asia Pacific and the investment opportunity it presents by watching the full video interview with William Ho.

The full video interview is embedded below and can also be viewed, along with previous Artemis Live video interviews, on a dedicated video page.

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