AXA hails move to technical risk
Interest rates staying lower for longer
and negative bond yields mean more
challenges for the life re/insurance
industry—but AXA’s chief executive officer
says the business is more shielded from these
forces since it has repositioned its portfolio in
Speaking at a briefing in Monte Carlo on
Monday (September 9), AXA chief executive
Thomas Buberl said the company’s move
towards writing more technical risks—such
as property/casualty, dependent on the skill
of an underwriter—as opposed to being
heavily exposed to products and risks that
are dependent on movements in the financial
markets such as life insurance, has helped the
insurer address the issue of lower rates.
An important part of this repositioning
for the insurer came in the form of its $15.3
billion acquisition of XL Group, a year
ago this week. This gave it a more balanced
portfolio by taking on more technical risks—
“This is a new reality that we have to deal
with,” he said.
The move towards taking exposure to
technical risk, as opposed to financial risk,
had been the subject of much “screaming”
and criticism from analysts, he added. AXA’s
share price fell by almost 10 percent when
it initially bought XL, but analysts are now
praising the move and the share price has
more than recovered.
“By shifting the portfolio towards technical
risk in a low interest rate environment, we are
well positioned,” Buberl said.
He pointed to XL’s strength in reinsurance,
an area in which AXA had been weak. He said
the move gave the group diversification, as
previously 80 percent of the company’s profits
had been generated from just 10 geographies.
He said the protection gap in climate
change gave an opportunity to grow in
reinsurance but added: “We need the proper
including in the form of XL’s reinsurance
business—which helps provide a buffer from
the long-term low interest rate environment.
Buberl said low interest rates were now “a
given” and any hope of increases in interest
rates had been “pushed down the road”,
citing one analyst’s view that the next rate
hike in Europe would be in 2025.
VigRe-inzerce-2019-187x133-03om.pdf 1 29.07.2019 13:36:35