by David French and Pablo Mayo Cerqueiro
NEW YORK/LONDON (Reuters) – French insurer Axa is considering options, including a sale and an IPO, for its property and casualty reinsurance arm XL Re to reduce its exposure to natural disasters, three sources familiar with the matter said. case.
The discussions, described as preliminary, without presuming their outcome, by these sources who requested anonymity, come two years after reports that the reinsurance branch of Axa aroused the interest of the French mutual insurer Covea.
Axa declined to comment.
Reinsurers assume certain risks retroceded by insurers in exchange for compensation. In the case of serious claims, these guarantees can be high, as well as losses.
Axa is working to reduce the exposure of its Axa XL division, which houses XL Re, in order to increase the predictability of its results. Reinsurance activity has thus declined, with revenues falling by almost a third last year to $3.2 billion, according to Axa’s 2022 accounts.
Axa XL, housed in Bermuda, had a book value of around $2 billion at the end of December.
Events such as Hurricane Ian last year – the third costliest in US history – prompted some reinsurers to cease this type of business, especially as climate change complicates the valuation risks. Others have been able to greatly increase the guarantees they claim for such services.
(David French in New York, Pablo Mayo Cerqueiro in London, with Amy-Jo Crowley and Carolyn Cohn in London, Echo Wang in New York and Silvia Aloisi in Paris, Jean-Stéphane Brosse)
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