Mitsui has put its commercial motor book into run-off. So what does this mean for the rest of the market?

Mitsui insists that its Lloyd’s division’s move to exit commercial motor business has been driven by the implementation of a new strategic direction, rather than the performance of the business.  

Head of property/casualty underwriting Graeme Rayner stressed that bodily injury claims trends seen in the book were in line with the wider market.

That may well be so, but it is also clear that the company has been battling to make its motor business profitable in recent years.

The full-year 2010 results of MSI Corporate Capital, the capacity provider to Mitsui’s Syndicate 3210 at Lloyd’s, show that the syndicate slashed its motor book by 59.7% to £11m during the year following a strategic review. “The remaining business has been written at revised terms and is expected to be profitable in 2011,” the company said at the time.

One can only conclude that Mitsui either lost the profitability battle, or decided that the remaining business was too small to justify the attention required to sustain any profitability it had achieved.

The ripple effect

So what does Mitsui’s exit mean for the rest of the market? The run-off book was small - in Rayner’s words, well under £10m - so it is not exactly going to shake up the market.

Nevertheless, brokers and clients like choice, so the loss of a provider could be a blow to them. In addition, the remaining commercial motor players may well see this as a small victory for the wider market and a sign that the more marginal players could decide to leave the business to the truly committed.

Hardy gets a boost

As one Lloyd’s insurer retracts, another is expanding. Hardy revealed this morning that 15% of its 2012 capacity would be provided by New York-based non-life insurer Tower Group, and that Bahraini reinsurer Arig had boosted its participation to 10% of capacity, from 7.5% in 2011.

This external capacity will free up the company’s own resources to an extent and make it more nimble, which could prove vital if the market turns.

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