Mitsui takes action after heavy PI losses

Mitsui Sumitomo’s Lloyd’s operation is aiming to return to underwriting profit in 2011 after a tough 2010 marred by motor and professional indemnity losses, restructuring and staff changes.

Mitsui Corporate Capital, which provides capacity to Syndicate 3210 at Lloyd’s, made a loss before tax of £20.6m in 2010 compared with a profit of £18.6m in 2009. The combined ratio increased to 114% from 103% and underwriting losses deepened to £34.7m from £9m in 2009.

The syndicate itself made a loss of £19.4m in 2010 compared with a profit of £14.4m in 2009. Mitsui described it as a year of transition for Syndicate 3210 and said the loss reflected the difficulties during the transition.

The company reviewed loss-making lines, particularly its PI and motor books, resulting in lower gross written premiums. It cut PI premium by 49.4% and motor by 57.9%. Overall, GWP fell to £271.7m in 2010 from £331.4m in 2009.

“While the reviews have resulted in a significant GWP reduction, they have delivered the right strategy for 2011. We are targeting profitable growth and tighter expense management, with the aim of a sub-100 combined ratio this year,” Mitsui at Lloyd’s general counsel David Casement told Insurance Times.

“We believe the re-profile of the book is largely complete, but we are continuing to manage expenses tightly,” he said. “We continue to monitor performance of all areas of the book carefully.”

While the syndicate was hit by the Chile earthquake and Queensland floods, and four large aviation losses, its biggest area of claims activity was PI following the financial crisis and recession. Claims reserves have been strengthened for the 2008 and 2009 underwriting years. The PI business reported a combined ratio of 219.5% in 2010, as against 140.3% in 2009.

Mitsui has also installed a new PI team, headed by Mark Brock, who has led a top-down strategic review of the PI business.