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  • Mark Geoghegan

Amlin's Atonement

Updated: Oct 13, 2019


By Cornelis van Haarlem - [ H ] Cornelis van Haarlem - Allegory of Repentance (1616) - Detail, CC BY 2.0, https://commons.wikimedia.org/w/index.php?curid=20492421

There is only one thing certain in this life and that is that the longer it goes on the more things we are going to get wrong.


We are all bound to stray. To err is human – we are not machines.


And let’s face it – even machines break down or run out of fuel and let us down in their own individual ways.


The dieter binges on fatty snacks in a moment of weakness in the full understanding of just how hard the additional calories are going to be to shift. The devout believer sins even though he or she knows that this is pushing them further away from the divine.


And underwriters get into classes of business that they do not fully understand and certainly don’t control. These bring underwriting losses.


Thus the first Buffett commandment is broken.


The sage of Omaha’s first law is this: “Rule One: Don’t lose money.”


This doesn’t mean that Buffett has never lost money, far from it.


His annual shareholder letters often contain lengthy apologies to his investors for misjudgements that seemed a good idea at the time. He has also been a long-term fan of the more volatile end of reinsurance where occasional large losses come with the territory.


No, it is Buffett’s second rule that is far more revealing and enlightening.


Buffett’s number two business commandment is never to forget rule number one.


The point is that while losing money is something that can happen, it is not something anyone should be making a regular habit of doing. It is obvious that any business that loses money for long enough will eventually run out of it.

Atonement is possible

But the more important lesson that Buffett is imparting is that it is how an organisation reacts after business failure that really matters.


We are all sinners, but the sinner can be redeemed. Atonement is possible. We can get rule one wrong every now and again, but as long as we never forget rule two we have hope and are not automatically condemned to the eternal hell fire.


Indeed scripture tells us that sinners repenting is the thing that brings the greatest joy to the deity.

And it doesn’t matter when you start putting things right, what you do is far more important than when you do it.


That is why the latest twist in the MS Amlin story is so poignant. Amlin rose from unspectacular beginnings to become one of the chosen few, an anointed acolyte in the highest insurance firmament.


It explains why its fall has been as spectacular as it has been dramatic.


MS Amlin taking the brave move to make brutal cuts and completely refocus its book is simply the right thing to do. It is easy to say that it should have taken this action sooner, harder or faster two years ago, but this misses the point.


Businesses get it wrong, but businesses that learn from their mistakes earn the chance of getting it right the second, third, or even fourth time around.


MS Amlin has just taken the hardest step on a journey towards forgiveness and redemption.


And that is a step that will always be accompanied by rejoicing from the insurance Gods.




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© Mark Geoghegan 2020

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