Reinsurance

In 2019, AXIS Reinsurance took important steps to reposition the portfolio to strengthen our book and mitigate volatility. Since 2018 we have enhanced our strategy, leadership, service standards and execution, making AXIS Re more relevant to a changing market.

Our progress can be seen with our increasing leadership in the global reinsurance market, and the talent we have attracted who have contributed to building a highly motivated and aligned team.

Financial Performance

Catastrophic events affected the performance of our reinsurance business in 2019. Impacting performance in particular were Japanese typhoons and poor crop conditions in the U.S. We expanded our presence in Japan during the past year to take advantage of improving conditions in what is one of the most attractive reinsurance markets. While we believe this is the right decision, our timing proved unfortunate as the region experienced record typhoon activity in 2019.

Gross premiums written in 2019 increased by 3.5%, to $3.2 billion. This largely reflected business growth and improved pricing in Catastrophe, Liability, Accident and Health lines, partially offset by reductions in Property lines due to our portfolio optimization efforts. We sustained an underwriting loss of $15.5 million, largely reflecting typhoon exposure, versus underwriting income of $46.5 million in 2018. AXIS Re’s combined ratio was 101.2%, or 2.8 points higher than a year ago.

Building a Stronger Portfolio

We made several portfolio enhancements in 2019, substantially reducing our exposure in lines such as Property. We moved capital away from lines and relationships that have historically underperformed, resulting in a 59% reduction in low return business, and deployed capital instead to high-return business. As a result of these actions, as well as rate improvement across several parts of our business, we believe our portfolio is healthier and better positioned for future profitability.

Getting Closer to Our Clients

The global reinsurance market is changing dramatically, influenced by factors ranging from climate risk to geopolitical issues to social inflation. In response to these changing conditions, we are positioning AXIS Re to deliver fresh solutions and support our clients with their risk transfer and capital management needs.

In 2019, we placed a renewed focus on building relationships and delivering value. We added the ability to structure tailor-made solutions for clients. We also expanded AXIS Re Strategic Partners, introduced in 2018, which uses a focused engagement model to enable a more consultative approach with key partners. By hiring additional strategic account executives, recruited from top industry and internal talent, we broadened the scope of AXIS Re Strategic Partners to work across North America, Europe and Asia.

Overall, we increased client interactions by 50% year-over-year versus 2018. Our client satisfaction improved by 30%, according to third-party research. This largely can be attributed to our increased focus on client management as well as our best-in-class claims payment. Paying claims quickly and fairly is a significant and defining strength of our business and in 2019, AXIS Re paid 17,000 claims and with a five-day average turnaround time.

Executing on Our Strategy

We enter 2020 with a healthier portfolio and improving market conditions. As pricing and terms across the industry continue to improve, enhancing rate adequacy, the actions we took in 2019 to reduce our volatility while continuing to strengthen our franchise means AXIS Re is well-positioned in 2020. We remain committed to the execution of our strategy and the achievement of our ambition to be a Top 10 global reinsurer.