Price action in reinsurance lines was evident in some areas at the January renewals with little reductions and response to loss activity. However, global catastrophe pricing remained a disappointment for AXIS Capital at the recent renewal, with President and Chief Executive Officer (CEO), Albert Benchimol calling for more price action across both insurance and reinsurance lines of business.
More than 50% of AXIS Capital’s reinsurance business was up for renewal at 1/1 2019, with the firm achieving bottom line growth and modest improvements in the price technical ratio. In line with the broader industry, AXIS states that it witnessed price increases for loss-affected areas, but overall, the market was generally flat.
“Conditions varied greatly by line and geography,” said Benchimol, speaking during the re/insurer’s Q4 and full-year 2018 earnings call.
Price action was evident in North America explained the CEO, adding that this is possibly in response to a greater dissatisfaction with recent results in loss trends. Price reductions were minimal and pricing responded to loss-activity, with the strongest price action, of 5%+ to 10%+ range, occurring in professional lines.
“Global cat pricing was a disappointment to us at January 1. Loss exposure accounts, we achieved increases anywhere from 10% to 25%, but non-loss affected accounts renewed flat or with reductions in the low-single-digit range. Especially in Europe, where capacity was plentiful,” said Benchimol.
Net-net, he continued, the renewal could be described as flat. “Generally, across the book, fees and commissions were flat, unless the underlying book was not performing adequately. Overall, we achieved modest growth in North America and Asia, and reduced our renewing book in Europe and in global specialty markets.
“We believe, we achieved better balance in our book with a modest improvement in the price technical ratio.”
Insurance and reinsurance industry commentary on the January renewals has described a period of disappointment for some, with the April 2019 renewals seen as a potential catalyst for pricing, given the loss experience in Japan.
Benchimol highlighted this, saying that AXIS would expect to see stronger price movements in Japan at the April renewals, and also in the U.S. catastrophe business at the June and July renewals.
“Our attitude across both insurance and reinsurance is that most lines of business require more price action for this industry to deliver an adequate return, and we intend to push hard for it. We are not afraid to incur low retention rates or shrink in businesses that are not delivering the right returns.
“While it will be imprudent of me to make overly confident statements about the future, our expectation is that the market is gaining momentum in the right direction, as carriers recognised both recent claims and expected loss trends,” said Benchimol.
