When renewing its outwards reinsurance for its property portfolio at the mid-year renewals, Bermuda-based AXIS Capital avoided raising the attachment point on its excess of loss occurrence cover.
For its insurance property book of business, AXIS renewed coverage at an attachment point in line with the previous year at $100 million, confirmed Pete Vogt, Chief Financial Officer (CFO), during the company’s recent Q2 2023 earnings call.
At the same time, added Vogt, AXIS renewed the quota share reinsurance treaties on its E&S book and global property portfolio at consistent levels, and this is in spite of the trend of sellers of protection looking to participate higher up the tower to avoid aggregates and frequency losses.
In terms of its inwards reinsurance operations, Vince Tizzio, President and Chief Executive Officer (CEO), explained that the July 1st renewals account for around 12% of the portfolio, stating that the firm continues “to demonstrate strong retention and new business generation across our targeted specialist lines.”
As many will be aware, AXIS has exited the property reinsurance line of business, and during Q2 2023, AXIS Re’s catastrophe loss ratio improved as a result of this, although was partially offset by a higher attritional loss ratio.
Within the reinsurance segment, gross premiums written did decline by 7% year-over-year, although when excluding exited lines, it actually grew 4%.
“The second quarter gave us further evidence that our repositioning efforts to shape AXIS Re into a more focused, specialist reinsurer are taking hold,” said Tizzio.
During the call, AXIS executives also responded to comments on the July 1st, 2023 PMLs, which reflect the new outwards reinsurance protection secured for its property insurance book, explaining why in the U.S. south east, for example, the peak wind PML only fell to 3.3% of equity from 3.5%, given the firm has exited the property reinsurance segment.
“One of the things we did in our renewal at July 1 is we did not renew three cat bonds we had,” said Vogt. “And so, the cat bonds were really helping the real tail risk that’s there.Now, we did get good indemnity coverage instead when we renewed our XOLs, but it’s the working of the cat bond through the model. It’s actually showing some of the noise there, mostly in south east wind.”
“If you look at all the other perils, they’re down pretty substantially. And again, I feel really good that now as we’re going into wind season, what’s more important is really what’s our outwards reinsurance property treaty look like, and we’re able to renew that XOL event occurrence treaty that still attaches at $100 million.
“And so, that was really good for us going forward, as well as the quota shares that we see on the other two, on the E&S line of business and the global property,” he added.
