AXIS Capital, Bermuda’s capital of private insurance and reinsurance, wants to expand its non-casualty services and third-party businesses, which should return the expected income from the risks it shares, said the CEO of the company. .
AXIS Capital has been working with so-called strategic capital for several years now, sharing its insurance portfolios and insurance books, to raise premiums.
This started mainly as a financial crisis, but with AXIS coming out of the recycling business it is expected that there will be a change soon as the business goes down and stops.
As previously mentioned, AXIS Capital intends to continue developing its insurance-linked securities (ILS) services, under the AXIS ILS brand.
This is expected to include increasing interest in the use of third-party capital, through a number of related groups and insurance-linked vehicles (ILS), but not focusing on raising funds to support the asset book, depending on the exit. from that space.
This does not mean that exposure to disasters will not be present in the offices of AXIS, the company is active in property insurance and other special lines that bring exposure to the cat, but it will not be writing only properties for rent or investors.
As a result, a change in focus on non-risky ILS is expected and CEO Albert Benchimol, as well as CFO Pete Vogt, discussed this positive change during the company’s recent earnings call.
Vogt explained, “We’re seeing a lot of success with our third-party partners in other businesses, outside of property and cat.
“We’ve done very well, considering the long-term business and looking at other opportunities in the book for the same businesses.”
There has been some change in the source of third-party interest-related income as a result of this change.
“I would say if you look at our fees, year after year, there’s about $12 million associated with the property year after year and I think we’re going to see that come,” said Vogt, but he added. “I think we’re going to see some revenue going up because of our business that’s in long lines.”
Albert Benchimol, CEO of AXIS Capital, confirmed the expansion of third-party capital and the ILS strategy at AXIS, focusing on long lines of business and non-cat risks.
“We started our third capital, obviously, with a cat and goods. But as you know, we have been very proud because we have been able to expand our relationships to include many risks, until today, more than 50% of our money is coming from long tails,” said Benchimol.
He added, “As you might expect, it’s likely that 2023 will be a low point when you lose a cat.”
But he confirmed the importance of this business to AXIS, saying, “We are still working hard to continue to share some risks.
“So over time, we expect that investment to be replaced by new relationships, new payments, as we look to expand our non-cat lines with our third-party partners.”
The decrease in fees started to appear in the most recent quarter, as we mentioned.
So it will be interesting to see how it goes over time and if there is evidence of growth, as accident-free lines are being shared more by third-party traders.