Consistency and differentiation: how AXA XL Re tackles casualty market challenges

“We’re in a very transitional market,” said Ian Sawyer, head of London casualty, reinsurance at AXA XL Re, addressing the volatile US casualty market.

Greg Dyer, leader of US casualty at AXA XL Re, agreed, adding: “The US market is facing significant pressures, for example, umbrella and auto liability with social inflation.

“We pride ourselves on consistent, transparent relationships.” Dyer

“Clients are looking for ways to maintain expiring terms while our loss picks continue to rise, with loss trends increasing and rates often not keeping up. This can make it challenging but we pride ourselves on consistent, transparent relationships,” Dyer said.

As the US casualty market experiences pricing volatility and rising retention costs, reinsurers are battling not just to win new business but to maintain long-term partnerships with existing clients.

Dyer explained the approach AXA XL Re is taking to help clients navigate this challenging environment. “We underwrite each client independently.

“We look at their own experience, their mix of business, and we work proactively with them to obtain better data to help us differentiate their results.”

Sawyer explained that AXA XL Re’s approach is built on market reputation and regular engagement with clients.

“Both teams are regarded as being strong quoting markets. We travel a lot between London and the US specifically to client offices, to spend time with clients and understand their business.”

Sawyer emphasised that this face-to-face interaction was vital in an increasingly complex market where transparency is key.

“The great thing about our models is that it is easy to explain to brokers how we’ve got from A to Z in the whole pricing process,” he said.

The real challenge, according to Sawyer, is the discrepancy in pricing across regions. “We sometimes have a big gap in pricing between companies and across regions.

“We’re all taking the same loss data, trending, developing it, and yet the gap can be significant.”

Dyer highlighted another factor weighing heavily on reinsurers. “Social inflation and nuclear verdicts are impacting several lines exposed to personal injury, including umbrella, auto and hospital professional liability.

“We’re being proactive and transparent with our clients as much as possible as we work through these challenges.

“Some of these situations are difficult, but we’re working with them to find structures and terms that make sense so we can maintain relationships,” he explained.

Sawyer echoed this sentiment, saying: “We want long-term, transparent relationships.”

Regional nuances

When it comes to differentiating AXA XL Re’s approach between the US and London offices, Dyer explained it was less about appetite and more about access points. “We have two points of access to US casualty business, and the difference is determined by what comes to each region.

“The US is focused on larger programmes and more quota share business, with some excess of loss (XOL), while London gets more XOL business, physicians, lawyers professional, smaller niche programmes and some smaller quota shares.

“They are now starting to see more global programmes on an XOL basis.”

“We have exactly the same assumptions and pricing models across both regions.” Sawyer

Sawyer highlighted London’s longevity in the market, giving it a unique position. “London has been in this space for 40 to 50 years, and there’s a very healthy market here.

“It’s more syndicated and specialist with a focus on small to mid-sized companies, sometimes with challenges around the edges.”

Despite these regional differences, Dyer and Sawyer both emphasised the consistency with which they evaluate business across both platforms.

“We have exactly the same assumptions and pricing models across both regions,” Sawyer said.

“Our actuarial teams work very collaboratively to ensure the same metrics and assumptions are used.”

In an environment where social inflation, litigation funding, and adverse development are complicating matters, Sawyer stressed how AXA XL Re remained committed to navigating through the difficulties.

As both US and London markets face unique challenges, AXA XL Re expects a challenging renewal season.

Sawyer highlighted the strain on the XOL market due to delayed cession of claims, saying: “We need to work hard to ensure our clients understand what is happening in this market.”

Dyer agreed that the US market is still under pressure, especially as loss trends rise.

“Rate changes need to outpace loss trend increases. Without an improvement in original insurance rates, we expect continued decreases in quota share commissions or increases in XOL rates but, as noted previously, this will differ by each line of business and each cedant,” he concluded.

Ian Sawyer is head of London casualty, reinsurance at AXA XL Re. He can be contacted at: ian.sawyer@axaxl.com

Greg Dyer is leader of US casualty at AXA XL Re. He can be contacted at: greg.dyer@axaxl.com

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