Why smart cycle management is key to ‘tricky’ nat cat line: AXA XL Re CEO

Nancy Bewlay (pictured), chief executive officer of AXA XL Reinsurance, is crystal clear on her remit: to add value to parent AXA Group. This also means smart cycle management and knowing when an opportunity presents itself, such as in the capacity-short property cat space right now.

An exodus of capacity from the property cat market has resulted in the best pricing in that sector since 2006—and this means a clear opportunity for reinsurers able and willing to operate in that space, Bewlay told Intelligent Insurer.

Bewlay, who took the reins of the reinsurance unit of AXA XL in March, replacing Charles Cooper, admits that property cat can be “a tricky space” and stresses the business will not accept too much volatility. But she is clear that competent and experienced players in this space, such as AXA XL Reinsurance, can reap the rewards of the cycle.

“We are still a big provider of nat cat capacity; there has been a big loss of capacity in that market, so we do see growth potential,” she said. “We manage our cat book carefully and strategically deploy our capital with a view on controlling our nat cat volatility.

“A capacity drain has meant there isn’t enough capacity for the primary market. Markets that would have had 150 percent on a placement last year are struggling to get 100 percent. In places such as Florida, it is even worse.

“It’s a tricky space but for those of us who have remained there is certainly opportunity to look at the risks in the market and charge an adequate price that reflects the exposure.”

On one level, Bewlay regards writing property cat business as part of the industry’s responsibility as the world grapples with climate change. The company has invested heavily in recent years in data and applying science to the way global warming will affect risk. She sees opportunity in reinsuring the climate-related products and services being developed.

“As primary insurers move into that space, that also means an opportunity for reinsurers,” she said.