Rumours of a sale of the firm’s reinsurance arm come as it reduces exposure to catastrophe lines
Axis is understood to be preparing to put its $3 billion reinsurance arm on the market. It comes after the company revealed that the unit had taken a hit during Q1, with a 9% or $125 million reduction in gross written premiums.
The reduction was attributed to decreases in catastrophe, motor, and property lines due to non-renewals and decreased line sizes.
The company reported a combined ratio of 91.4% for the first quarter, compared to 98.9% for Q1 2021.
Albert Benchimol, president and CEO of AXIS Capital, noted that: ”Within our reinsurance segment, the team continued to make good progress in strengthening our portfolio while reducing our footprint in catastrophe, highlighted by a 45% reduction in catastrophe lines premium.
“We’re excited by the positive momentum that we continue to see throughout our business. Our focus is to build on it - and drive sustained profitable growth, further enhance our efficiency, and ultimately achieve our goal of becoming a top quintile performer.”
Pre-tax catastrophe and weather-related losses, net of reinsurance, for the quarter were $60m ($50 million, after-tax), (Insurance: $33 million; Reinsurance: $27 million), or 4.7 points, including $30m, or 2.3 points attributable to the Russia-Ukraine war.
The remaining losses of $30m were primarily attributable to Eastern Australia floods, and other weather-related events. Comparatively, pre-tax catastrophe and weather-related losses were $110 million (Insurance: $36 million; Reinsurance: $74 million), or 10.1 points, in 2021.
In 2015, Axis announced it would enter into an $11 billion merger with Partner Re, which would have seen it become a top five global reinsurer. But the deal was called off and Italian investment conglomerate swooped in to buy the Bermudian company, which today remains a pure-play reinsurer.
Axis went on to acquire Novae in 2017, creating a $2 billion insurer in the London specialty market and top ten re/insurer at Lloyd’s.