Albert Benchimol, the President and Chief Executive Officer (CEO) of Bermudian insurer and reinsurer AXIS Capital Holdings Limited, has said that the firm should be proud of the fact it was able to increase its use of third-party reinsurance capital support at the January 1st, 2019 renewals.
Speaking during the re/insurer’s Q4 and full-year 2018 earnings call, Benchimol highlighted a difficult third-party capital market at the recent renewals season. But despite the challenges, the President and CEO revealed that AXIS actually managed to increase the amount of third-party capital support it achieved at 1/1.
“We have more third-party capital. We have a more diversified group of investors in our third-party capital. And, we continue to expand the number of lines that we share with third-party capital,” said Benchimol.
He added that AXIS is always looking to improve its risk funding and its ceded program, which is evidenced by some steps the firm took during 2018. As we discussed recently, AXIS ceded almost $600 million of premiums via insurance-linked securities (ILS) style arrangements to its strategic capital partners in 2018, and while fee income from these strategic capital partners declined in Q4, it did increase for the full-year 2018.
Other improvements the re/insurer made in 2018, according to Benchimol, includes the creation of its $130 million Alturas Re sidecar vehicle which increases its quota share participation while reducing or mitigating property book volatility.
At the same time, Benchimol said that AXIS has completed a number of additions, including the purchase of some aggregate excess of loss protection designed to prevent a tail-end exposure, which, would have been almost fully utilised in a Harvey, Irma, and Maria scenario.
“So, these are the working layers. And we are going to be renewing our various property programs in May and again we will be looking for opportunities to enhance that. So, net-net, our ceded protection package is a better package at January 1st, 2019, than it was last year,” said Benchimol.
AXIS is clearly one of the re/insurers that has become prudent at leveraging and working with third-party, or alternative reinsurance capital, and is reportedly one of the few players that increased its use of this pool of capital at the January 1st, 2019 renewals.
The firm increased its gross written premiums in its reinsurance segment in both Q4 and for the full-year 2018, while net written premiums in the segment declined in Q4, as a result of the increased ceded premiums in cat, A&H, credit and surety, and liability, but increased by almost 4% for the full-year.