Bermuda headquartered insurance and reinsurance group AXIS Capital Holdings started raising capital for its new third-party reinsurance capital management unit, AXIS Re Ventures, last year but the unit began operating on 1st January 2014.
AXIS Ventures unit, which sits within AXIS Re so is perhaps more accurately named AXIS Re Ventures, launched in the fourth-quarter of 2013. AXIS hired experienced reinsurance convergence capital exec Ben Rubin to head up the initiative, who now leads the AXIS Re Ventures unit as Executive Vice President, Director Capital Markets at AXIS Re.
Following on from the Ventures units launch in Q4, AXIS had been actively raising capital from third-party institutional investors in the run-up to the January reinsurance renewals.
During AXIS’ recent fourth-quarter earnings call, CFO Joseph Henry said that the firm had received an initial capital commitment for its AXIS Re Ventures unit before the end of the year. Henry stated; “While Axis Ventures did not commence operations until January 1st 2014 we received investment capital from our third-party investors before the 2013 year-end.”
The investment commitment received from third-parties has been included in AXIS’ fourth quarter earnings statement as part of the non-controlling interest listed. Total non-controlling interest is listed as $50m at the end of 2013, but at this time we cannot be certain how much of this is third-party reinsurance capital held by AXIS Ventures.
AXIS continued its trend of using the capital markets as a source of capacity to hedge risks through use of retrocession and capital markets structures in 2013. During the year AXIS completed the Northshore Re Limited (Series 2013-1) catastrophe bond, the first cat bond the firm has sponsored.
AXIS has also continued its use of industry loss warranties (ILW’s) and other sources of retrocessional reinsurance protection, traditional and non-traditional capital in 2013, as it seeks to better protect its portfolio going forwards and take advantage of attractive capital markets pricing.
CEO Albert Benchimol said during the earnings call that he expects AXIS to make a few more modifications to its reinsurance purchases in 2014, including the use of some retrocession to help manage profitability and volatility within the firms reinsurance book.
AXIS CEO Albert Benchimol said recently that AXIS looks to third-party reinsurance capital as a long-term play.