AXIS CEO Albert Benchimol has maintained that his company’s decision to significantly pull back from property and catastrophe reinsurance lines does not reflect any particular view on present market conditions.
Rather, AXIS has decided that the volatility inherent in these lines does not align with the long-term goals of the company, Benchimol explained during a Q2 earnings call.
The company reported operating income of $149 million for the second-quarter of 2022, down from $171 million in the prior year quarter.
This comes after AXIS moved to further reduce the volatility of its portfolio at the January renewals, cutting its reinsurance property and property catastrophe premiums by 45%.
And since then, AXIS Re has announced that it plans to shift its focus to becoming a specialist reinsurer with a commitment to casualty, specialty, A&H, and credit lines, with Ann Haugh taking over as CEO.
“During the quarter we announced bold moves to further advance our strategy, among them was the exit from reinsurance property and casualty lines,” Benchimol explained during the earnings call.
“We completed the shift of AXIS Re to a specialist reinsurer, with a commitment to profitable casualty, specialty accidents and health and credit lines. And this aligns with our overarching goal of being a leading specialty underwriter. We find that reinsurance remains an attractive channel to access specialty risk that we can’t easily obtain through our insurance business,” he continued. “It provides additional scale, balance and geographical diversification to our consolidated portfolio, and we’re very good at it. Our clients and brokers appreciate the value that we bring to their businesses.”
“On the other hand, we do not believe that the AXIS we are building is the best market for volatile property and catastrophe reinsurance lines. We felt that best to be clear with our broker partners and customers as to the sustainable long-term risk appetite of our business.”
However, Benchimol also stressed that AXIS’s exit from catastrophe reinsurance is “not a view on the catastrophe business within the broader industry,” adding that he in fact expects this line will continue to improve at the upcoming January renewals.
“Rather, this is a strategic decision to advance our progress towards the company we choose to be, a leader in specialty underwriting with a strong and consistent earnings profile,” the CEO asserted.
Benchimol also explained that, by combining all of its front-end business capabilities under one leader, and all underwriting support and analytics under a CUO, AXIS hopes to increase our efficiency and agility and speed to market, as well as its ability to respond to customers’ needs.
Commenting on the company’s performance over the recent Q2 period, Benchimol said: “These improved results are the product of a disciplined and concerted multi-year effort to enhance our leadership in specialty lines markets and shift our book of business towards profitable specialty risks, that provide attractive risk-adjusted returns, and lower overall volatility, a commitment that continued into this quarter.”
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