Axa XL’s Gunter: Sale of reinsurance business “not on my radar”

Axa XL CEO Scott Gunter has sought to end any lasting speculation over the future ownership of the company’s reinsurance business by saying that a sale of the platform “is not on my radar”.

A report from Reuters earlier this summer suggested Axa was considering offloading Axa XL Reinsurance, with the newswire at the time detailing that the French insurer was discussing strategic options for the platform, including a private sale or potential stock market listing.

Such speculation over Axa XL Re’s future is nothing new, with Axa understood to have sounded out potential buyers of the platform – a list that included Scor – shortly before it completed its acquisition of XL Group in 2018.

And in 2020, this publication reported that French mutual Covéa had expressed an interest in acquiring Axa XL Re.

Talking to The Insurer, Gunter was adamant that the reinsurance business has an important role to play for Axa XL going forward.

“We’ve put a lot of time and effort in the last, at least two, if not three years, to define a strategy, figure out the appetite [around] how best to have assumed reinsurance as part of the broader Axa portfolio, and that was a lot of work for everybody,” he said.

As Gunter noted, last year Axa XL Re “significantly” reduced its catastrophe exposure, with the executive describing its previous involvement in the space as “overweight”.

“We redefined our relationship with clients, and said, ‘Okay, we want to have a multi-line engagement, not just a single product’, and we changed the dynamic,” Gunter said.

“We put all this time and effort into [the reinsurance business], so our position is now’s the time we're reaping the rewards of that effort,” he stated.

“Our plan right now is to come off the last couple of years, have meetings, find new clients who are engaged and who believe in that multi-line approach relationship, and enhance the ones we already have. So [a sale of Axa XL Re is] not on my radar,” he declared.

The fruits of the reinsurance unit’s remediation efforts were made clear in Axa XL Re’s H1 2023 results, with the division posting a combined ratio of 80.8 percent for the six-month stretch, an improvement of 6 percentage points year on year.

And while Axa XL Re’s revenues fell to €1.12bn ($1.2bn) during the first half, down from the prior-year period’s €1.45bn, the reinsurance unit’s underlying earnings almost doubled to €297mn from H1 2022’s €151mn.

“It’s a low 80s [combined ratio] business, and we’ve done all the work, and the request from [Axa CEO Thomas Buberl] is, and the plan is, we want to grow it,” said Gunter.

Despite the significant improvements within the property catastrophe market over the past year, the reinsurance business’s growth will be outside of that space.

Having reduced its cat writings, Gunter said Axa XL Re is now in a better position to support clients with its other offerings.

“[In] reinsurance, we were overweight on cat, to the point where it was consuming the conversation beyond the other services and products we were delivering to clients,” said Gunter.

“And the problem with that is cat can become the topic of conversation every meeting, everyone talks about it, and all the other [coverages] you're working on just don't get the attention and focus.

“So the upside by reducing the cat is it has actually allowed us to focus on the specialty business and all the other products that we sell,” he added.