AXIS’ reinsurance premiums ceded to investors rises 17% in 2023

AXIS Capital, the Bermuda based specialty insurance and reinsurance company, has increased its activities with third-party investors in 2023, ceding 17% more in reinsurance premiums to them, than it had in the prior year.

One of the drivers is the fact that, in 2023, AXIS Capital partnered with investor Stone Point to launch the Monarch Point Re casualty ILS vehicle during the third-quarter of the year.

Monarch Point Re is a collateralized reinsurer, capitalised with a more than $400 million raise, operating as a kind of third-party capitalised casualty reinsurance sidecar structure for AXIS and the investor.

That initiative helped to drive Q3 2023 reinsurance premiums ceded to AXIS’ so-called strategic capital partners higher, specifically the “Other Strategic Capital Partners” where ILS style investor relationships are accounted for.

Premiums ceded had been shrinking for some time, since AXIS pulled-back from property catastrophe reinsurance underwriting.

But AXIS had said it planned to pivot its AXIS ILS business to be more aligned with its specialty / casualty longer-tailed lines underwriting, as has now become evident.

The increased reinsurance premiums ceded to these ILS style third-party investors continued in the fourth-quarter of 2023.

AXIS has reported ceding $98.5 million in reinsurance premiums to the “other strategic capital partners”, up from $78.1 million in the prior year period.

Total premiums ceded were $98.8 million in Q4 2023, as AXIS’ focus remained on its reinsurance business, when ceding premiums to these ILS-style investor relationships.

For the full-year, AXIS Capital ceded over $872 million in reinsurance premiums to these capital partner investors, a 17% increase over the prior year.

The increased cessions to third-party investors is also driving higher fee income for AXIS as well, with over $14.7 million recorded in Q4 2023, up from $12.1 million in the prior year.

Full-year 2023 strategic capital partner fee income earned by AXIS Capital rose to almost $52.8 million, up slightly from $52.7 million in the previous year.

With a broadening array of third-party capital activities at AXIS and its AXIS ILS unit, including the Monarch Point Re casualty sidecar structure and of course the firm’s first cyber catastrophe bond Long Walk Re, the company is likely to continue growing its premiums ceded, earning higher fees as performance allows as well.