Axis Capital wrote 10% less property catastrophe reinsurance premium at the 1 January renewals as part of a wider strategy to cut exposure to that line of business, CEO Albert Benchimol has said.
Speaking at his company’s fourth-quarter earnings call on Thursday, Benchimol told analysts that the strategy was driven by mounting concerns over the impact of climate change on property catastrophe risk and the difficulty of projecting losses.
"We’re updating our models to assume a net shift up in loss curves, and we're responding to that with both increased pricing and less exposure to property.
“Our goal is [to] make property, property cat, a smaller percentage of our overall book to make sure that we generate sufficient profits in other lines, so that even if profitability in property is not where we want it to be, we don't let it drag down the entire company.”
Benchimol’s comments came after the company posted annual cat losses of $774mn for 2020, a 130% increase on the $336mn reported in 2019. Fourth-quarter cat losses totalled $198mn, up 41% on the year, with some $125mn related to Covid-19 and $73mn linked mainly to hurricanes Zeta and Delta.
The Axis CEO welcomed the price increases that carriers were able to negotiate at the recent renewals, but said more needed to be done to reflect the volatile threat of climate risk.
“We still believe a multi-year correction is needed,” he warned. “There continues to be clear evidence of the catastrophic impact that climate change is having on weather, property, agriculture and other lines,” he said.
Axis wrote about the same amount of overall limit at the 1 January renewals as in the previous year, in line with the company’s strategy, Benchimol said.
Separately, the Bermudian (re)insurer closed one of its third-party capital management vehicles, Axis Ventures Reinsurance, in November last year, according to a filing by the Bermuda Monetary Authority. However, it is understood that the underlying business has been transferred to structures managed by a service provider Horseshoe Re, with no change to the underlying contracts and capital underpinnings.
This article has been updated to clarify that Axis Ventures Re business has been novated to Horseshoe Re.
