AXA overtakes AIG to lead US D&O, which sees double-digit rate increases

AXA has overtaken AIG in the United States directors and officers (D&O) liability market, a sector that has seen double-digit rate increases in the past year.

That’s according to ratings agency Fitch. “Perennial market leader AIG has conceded market share over the last several years as it repositions its book of business in efforts to improve profitability,” said Fitch. “This continues as the company had a strong influence on market direction by pulling back on underwriting limits and capacity in 2019.”

As at midyear 2019, AXA XL was the market leader, with a market share of 15 percent.

Fitch says that AXA, AIG and Chubb will remain relatively close as the top three D&O underwriters going forward. Fitch notes that several underwriters expanded or gained entry to the D&O market in recent years via acquisitions, including: Chubb, with the Merger of Ace Group and the Chubb Corporation,; AXA Group, acquiring XL Group; Tokio Marine US, buying HCC Insurance Holdings, and Sompo Group buying Endurance Specialty Holdings. Berkshire Hathaway represents the one leading insurer that has rapidly expanded organically in D&O over the last several years.

Market fundamentals in the U.S. D&O liability insurance segment changed significantly in 2019 with underwriters responding to poorer performance amid a shifting tort environment, said Fitch. “D&O pricing has responded more sharply to weaker performance and less favourable claims trends. Market reports from insurance brokers indicate double-digit rate increases in recent renewals.”

It said that market recognition of deteriorating results and the need for underwriting and pricing actions have taken hold. Reductions in policy limits, retentions, and underwriting capacity offered by several large market participants, including traditional market leader AIG and Zurich American Insurance Group, are promoting more pronounced rate movement. “This renewed momentum suggests that rate hardening in the segment will endure through 2020,” said Fitch.

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