French insurer AXA opted to lower its natural catastrophe retention levels at the January 2021 reinsurance renewals, the company has revealed.
For its insurance segment, the retention has been lowered to €500 million for North America key perils, including hurricane and earthquake, with reinsurance coverage to absorb costs up to $1.25 billion above this level.
This compares to AXA’s 2020 reinsurance program, when the company agreed to retain up to $750 million on North American hurricanes and earthquakes, with reinsurance to cover $1 billion above this level.
Agreements remain unchanged for European windstorm events, with AXA’s retention set at $500 million and reinsurance applying to higher losses at up to $2.9 billion.
The $350 million retention also remains in place for “other perils,” which include Turkey earthquake, Mexico earthquake and windstorm, European and North American floods, as well as a series of other secondary perils.
Reinsurance coverage for all segments at AXA now includes coverage of $650 million in excess of a retention of $1.25 billion.
AXA explained that the lower retention levels would help it to protect against a “lower return period.”
The move comes as AXA reported an 18% dip in net income to €3.164 billion for 2020 and a 34% dip in underlying earnings to €4.264 billion, driven in part by the impacts of the COVID-19 pandemic on the performance of its AXA XL property and casualty (P&C) business.