AXIS may lose business at 1.1 on cat retreat, but won’t look back: CEO

Re/insurer  AXIS Capital could lose some reinsurance business through the 1.1 renewals as cedants are forced to give specialty and liability business to those reinsurers still willing to take on the cat exposure which AXIS has chosen to drop.

“Yes, there is a risk that we would lose some business,” CEO Albert Benchimol (Pictured) told his company’s Q3 earnings call. “Some cases” may arise where cedants have to take some specialty or liability business away from AXIS to “facilitate” a cat placement with a rival reinsurer.

“In the longer picture, I don’t think it matters whether we renew $100 million more or less at the 1.1,” Benchimol said. “What matters is our transition to be a specialty underwriter with high profitability and low volatility.”

Benchimol claims feedback from clients has been positive since the June 2022 announcement that the group would drop property cat reinsurance.

“We have been getting very positive comments from clients and brokers about their desire to do business with us,” Benchimol said. “We have been receiving lots of compliments about the way we’ve managed the process.”

AXIS believes both that it won’t be the first to suffer amongst reinsurers who are pulling away from property cat exposures and that its substantial business with a stable coterie of non-cat clients will be unaffected.

“Our hope is that the relationships we’ve built over time are going to serve us well here.”

In the third quarter, traditionally the smallest quarter for reinsurance, gross written premium fell 17% in reinsurance, holding GWP growth to a mere 4%. Management put the entire loss to the resignation from property cat and claimed gain in agriculture had clawed back some of the setback. First nine months gross written premium in reinsurance was down 9%.

Restated pro-forma to exclude property cat from prior period figures, gross written premium in the reinsurance segment after nine months rose 12.8% year on year after 15.6% growth in 2021.

But the impact was also visible in claims. Current-year catastrophe and weather-related loss ratio of 20.3% was 7.7 percentage points (pps) below the prior year period reading. Attritional loss ratios were up mildly on the change in the business mix of the lingering book.

“Whatever book we renew at 1.1, I am highly confident it will be a book with strong relationship-minded buyers and that book will be a very good base for future profitable growth.”

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