Bermudian insurance and reinsurance specialist AXIS Capital Holdings Limited targets continued expansion of its relationships with so-called strategic capital partners in 2019 and beyond, according to CEO Albert Benchimol.
AXIS has increasingly been leveraging third-party sources of capital from institutional investors within its underwriting business, opting to share an increasing amount of premiums through insurance-linked securities (ILS) type arrangements with its capital partners.
In 2018 doubled the cessions made via these ILS type arrangements to strategic capital partners to nearly $600 million of premiums during the year, resulting also in a significant increase in fee income from third-party capital activities which jumped to almost $48.5 million for the year.
The majority of the ILS like cessions to strategic capital partners are channeled through the AXIS Re Ventures unit, which interfaces with institutions and ILS investors to deliver portfolios of reinsurance risk they can invest directly into to fully collateralize.
At the start of 2019 AXIS also launched a new collateralized reinsurance sidecar vehicle, Alturas Re, which launched at $130 million for the January renewal and appears established for further growth with two sections enabling investors to access insurance and reinsurance returns.
The importance of this business segment at AXIS is not understated by the firm’s CEO Albert Benchimol, who recently explained that his company has been in the process of transforming itself, creating a platform to support expansion and growth.
In 2019 Benchimol wants to see a period of implementation, when the platform developed is put to good use to drive strategic priorities forward through this year and beyond.
Among those priorities is continued growth of the relationships with strategic capital partners, which is seen as one of the key areas that will “accelerate our path to our strategic goals” Benchimol said.
Benchimol categorises this work as “high-impact initiatives” meaning areas of strategic focus that can make a significant difference.
Here he calls on his company to expand strategic capital partner relationships and to develop new risk-funding vehicles, that can be used to channel different types of risk to the investor community in different ways.
Benchimol is clearly transitioning AXIS from a traditional reinsurer, with its own equity backed balance-sheet, to one that uses the most appropriate capital and risk funding vehicle for the risks in question.
Strategically it’s a sound approach that can help to deliver broader growth to the company over the short-term and deliver attractive fees, but as with all reinsurers the proof will be in how this sits within the overall enterprise a decade or more from now.
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