Avoiding risk is not a sustainable strategy; industry must collaborate closely – AXA XL Reinsurance

Secondary perils such as wildfires and severe convective storms (SCS) have firmly stepped into the foreground of the North American risk landscape – and should now be treated as “primary” exposures, says Greg Schiffer (pictured), CEO of AXA XL Reinsurance in North America.

Key points
AXA XL Reinsurance to grow in North America
Sustainable cover needs shared risk
Pricing adequacy is non-negotiable

“In the last five years we’ve seen a lot of nat cat events – hurricanes, but also wildfire and SCS. Secondary perils have really become primary perils for our clients and consumers,” he told APCIA Today. “It’s important our clients have availability of reinsurance.”

“It’s not about walking away from risk. It’s about making coverage sustainable.”

Schiffer called the situation “a big opportunity”, and urged insurers, reinsurers and governments to “stand shoulder to shoulder” and collaborate far more closely to keep coverage both viable and available.

In high-risk regions such as California, where volatility is mounting, coverage is becoming harder to sustain without broader alignment.

“Our industry needs to align with municipalities on zoning, building codes and broader mitigation strategies. It’s not about walking away from risk. It’s about making coverage sustainable.”

Avoidance, he added, is not a strategy AXA XL Reinsurance supports. “We want to provide reinsurance, traditional or otherwise, while ensuring there is adequate mitigation and adaptation.”

Targeted growth, with discipline intact

Almost a year into the role, Schiffer spent his first 100 days mapping where AXA XL Reinsurance can grow without compromising discipline. He sees four clear areas for expansion, particularly in specialty business lines, such as engineering and credit and surety.

“We see opportunity to grow our business in North America,” said Schiffer. “If you look at macroeconomic conditions over the next five years, there’ll be continued infrastructure growth and advancement. And we want to be front and centre for those opportunities.”

“That means being present to support construction activity, not just in the US, but also across the border in Canada,” he added.

In Canada, AXA XL Reinsurance is looking to grow its P&C book, expand facultative writings and build out its construction and surety portfolio. But that growth will not come at the expense of underwriting discipline – a point Schiffer is keen to underline.

“We want to work with the right clients and stay consistent through the cycle,” he said.

He noted the company’s intent to maintain and deepen its relationships with core global and national clients, while expanding selectively into the “super regional” space – larger regional insurers with room to grow.

Adequacy is non-negotiable

Looking to the 1/1 renewals, Schiffer’s main message is pricing adequacy across all lines. “Whether it’s property or casualty, we need to be able to offer a sustainable product,” he said.

Litigation funding, social inflation and secondary perils are all pushing future loss burdens higher. While the property market has seen some stabilisation, Schiffer said AXA XL Reinsurance will continue to underwrite every programme on its own merits, guided by strong data and individual risk profiles.

On attachment points and aggregate protection for US wind and SCS, Schiffer said AXA XL Reinsurance will consider products “where they’re sustainable over the long term and priced adequately”, but “We have to be confident we’re covering the risk we’re taking on,” he said.

Casualty caution

In US casualty, Schiffer sees mixed signals. On the positive side, in the excess casualty market “loss costs and rates are outpacing loss trend”, but prior-year reserve strengthening still continues particularly in long-tail lines.

“The professional lines market shows some flattening of rates, which is positive,” he said, “but social inflation remains across both excess casualty and professional lines.

Schiffer said clients are evolving their reserving and claims practices, which is a step in the right direction, but these changes need to be understood and factored into pricing models. “Again, it comes down to data,” he said.

Retrocession and alternative capital continue to play a central role in AXA XL Reinsurance’s capital strategy. With stabilisation in property and further innovation in third-party capital structures, he sees continued appetite across property, casualty and specialty.

“What gives us confidence is understanding the exposure units and ensuring all perils are captured in the total loss cost,” he said.

“We take a long-term view, growing with our clients as they grow,” Schiffer concluded. “We’re global yet local and consistent in what we offer.”

Greg Schiffer is the chief executive officer of North America, reinsurance at AXA XL Re. He can be contacted at: greg.schiffer@axaxl.com

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