AXA Group is expecting the global insurance industry to incur at least $70 billion of natural catastrophe losses over 2018, AXA XL’s Chief Executive Officer (CEO) Greg Hendrick told attendees at the Group’s annual investor day on Wednesday.
“That makes ’17 and ’18 together the single largest two-year period,” Hendrick noted. “It will be over $200 billion of insured catastrophe losses.”
He added that this figure has really only been amassed over the last 14 months, as the bulk of the large catastrophe events have occurred since August 2017.
However, despite the magnitude of the loss, the company sees the results as part of a natural variation in catastrophe re/insurance trends.
“As you look back over time, it doesn’t always happen like you’ve seen in ’17 and ’18,” Hendrick said. “There are periods that you see, ’13, ’14, ’15, and ‘6, ‘7, ‘8, where you have very low activity over a period of time … We believe this has not changed, that this variability of results will continue.”
In response to these large industry losses, AXA expects rates across property insurance, marine, aerospace and a number of other lines to see an acceleration going into 2019.
“Regardless of the what the losses end up being in total, there has been enough activity when combined with the man-made loss activity as well experienced in the industry, that we clearly see an increasing of price increases in our short-tail business,” Hendrick told investors.
The extent of these pricing increases will also depend in part on how the alternative capital market responds to a second consecutive year of large catastrophe losses, Hendrick explained.
“Does alternative capital, which I believe in passionately for the long haul, in the near term do they want to reset the price a little bit and do they want to try and make a little more return after two difficult years that they’ve experienced as well,” he said.
“But I do believe regardless of the outcome of that conversation that we will continue to get rate going forwards.”
