AXIS has more deals still to lose on property cat retreat

Re/insurer  AXIS Capital has more collateral damage to suffer from its 2022 resignation from property cat reinsurance, well beyond the pure-play property cat deals from which the company continues to bow out and beyond lost business management had previously flagged, top company officials have indicated.

“Stepping back and looking at our specialist reinsurance book overall, we continue to prioritise margin over top line growth and to build a strong and more stable and profitable book for the future,” CFO Peter Vogt told his company's Q1 earnings call.

AXIS can now identify deals worth $40 million in premium where it had still wanted the business and lost out following its decision axe property re from its offer, officials told the Q1 earnings call. That sum is up from $10 million visible one quarter prior in part as the tally rose through the April 1 renewals. It’s all “above and beyond” the impact of leaving property cat non-renewed.

But lost business above and beyond property cat also includes $110 million in multi-line umbrella business, officials indicated for the Q1 call, of which $80 million was recognized in Q1 and the rest is still due in 2023, about 1/3 in Q2 and 2/3 in Q3.

“We do anticipate lost premium from this bouquet business of approximately $30 million throughout the rest of this year,” Vogt said of the business “centred on the liability book” and “not available” for AXIS following the portfolio shift.

Those sums remain a minority of the business lost Q1 on the repositioning. Vogt reiterated prior estimates of $200 million in non-renewed property cat and engineering business and $10 million lost on an evacuation from aviation lines.

The rump AXIS reinsurance segment ended up suffering a 26% or $341 million decline in Q1 gross written premium to $966 million, more than offsetting a 7% gain in the specialty insurance segment to secure a 10% year on year decline in GWP for the group as a whole.

Sums could be subject to further revision, officials suggested between the lines.

“There is potential for other impact,” CEO-in-waiting Vincent Tizzio (pictured) said. “It will obviously depend on the attractiveness of the pricing and the suitability of the terms we are signing on to.”

“But that is, at the moment, where we stand.”

AXIS Capital delivered arguably the biggest dose of shock and awe amongst companies announcing a retreat from nat cat lines in 2022.

AXIS capped off a period of heady nat cat reductions, including a 25% cut in the property cat book at 1.1 2022, with a mid-year announcement it would abandon property cat reinsurance altogether. By the time July renewals had gone by, PMLs were already down ~65% on average across the curve at AXIS versus 2019.

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