Axis Re: growth in Asia & Lloyd’s

The search for capital relief under Solvency II and thin margins on the insurance side of the business are the two biggest factors driving demand for reinsurance in Europe at the moment, Jan Ekberg, president of EMEA, Axis Re, told Baden-Baden Today.

He said that reinsurance remains a very efficient tool for insurers as they grapple with both of these challenges.

“A few things can drive reinsurance demand in Europe. First, corporate profit margins are thin and therefore companies are likely to buy more reinsurance due to the deep efficiency of purchase at the moment,” Ekberg said.

“Second, solvency is still an issue, so structured deals for capital relief due to solvency can still be seen in the market. Based on what we have heard this autumn, we expect buyers to broadly buy unchanged structures to 2018.”

He said that Europe remains a challenging environment for insurers to operate in—and that pricing must increase at some point. Certain lines of business such as industrial property remain a specific challenge and the industry is seeking improvements in the next renewals.

“While the primary insurance sector in Europe varies by country and by market, my view is that Europe is a competitive market in most lines of business,” he said.

“That said, pricing levels are not sustainable and we must ensure that the risk:reward balance is achieved on key lines of business.

“We are starting to see this slowly unfold. One example is in the German industrial property area—results in this area are not strong at the moment and we hope to see improvements for the January 1 renewals.”

Despite potential improvements on the primary side, however, Ekberg admits it will be a challenge to achieve the same on the reinsurance side.

“Market conditions will continue to be challenging. While we would all like conditions to stabilise, we expect to see a gradual increase in price equilibrium,” he said.

Partners Against this challenging landscape, Axis Re has made adjustments to its business in recent months to secure growth.

A big part of this approach revolves around getting closer to clients and it has launched Axis Re Strategic Partners, a dedicated team focused on the needs of clients and brokers, to this end.

“We are being bolder in our approach, and boosting capabilities in several areas across the world,” Ekberg said.

“First, we’re enhancing our client engagement model to enable a more consultative approach and offer clients more tailored solutions. We aim to expand client relationships, and one way we’re doing this is through the launch of Axis Re Strategic Partners.”

The reinsurer has also named three new strategic account executives in EMEA who will build relationships with key clients.

“We are starting to see results,” Ekberg said. He added that the reinsurer has also identified Asia and Lloyd’s as areas where it can increase market penetration.

“We’ve dedicated a specific team to service our expert-driven Specialty Re businesses, which has potential for us to scale global product strategies,” he said.

He acknowledges that the reinsurer will also need to take advantage of alternative capacity to achieve a leadership position in the market, which he sees as complementary to its own offering and capacity.

“We use our own capital, and we also partner. Axis Re aims to grow market leadership and to position ourselves as a top 10 reinsurer. We intend to continue our strong partnerships with ILS markets to deliver the best value to our clients,” Ekberg said.

He expects the dialogue in Baden-Baden to focus on three things. “First, conversations may address mergers and acquisitions in the industry and in EMEA.

“Second, I foresee discussion on cat losses from Hurricane Florence and the tsunamis in Asia and the impact those will have. Third, I expect conversations around pricing and how the market is moving,” he concluded.

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