Nancy Bewlay (photo), Managing Director of AXA XL Reinsurance, is perfectly clear on her mission: to add value to the parent AXA group. It also means smart cycle management and knowing when an opportunity arises, like in the property chat room at reduced capacity right now.
An exodus of capacity from the real estate cat market has resulted in the best pricing in this sector since 2006 – and that means a clear opportunity for reinsurers able and willing to operate in this space, Bewlay said. Smart insurer.
Bewlay, who took over the reins of AXA XL’s reinsurance unit in March, replacing Charles Cooper, admits the real estate chat can be “a tricky space” and stresses the firm won’t accept too many volatility. But it is clear that competent and experienced players in this field, such as AXA XL Reinsurance, can reap the benefits of the cycle.
“We’re still a big provider of nat chat capability; there has been a big loss of capacity in this market, so we see potential for growth,” she said. “We manage our cat book carefully and strategically deploy our capital to control the volatility of our cat nat.
“A capacity leak means that there is not enough capacity for the primary market. Markets that would have had 150% on a placement last year are struggling to get 100%. In places like Florida, it’s even worse.
“It’s a tricky space, but for those of us who stayed, it’s certainly possible to look at the market risks and charge an adequate price that reflects the exposure.”
On one level, Bewlay views real estate chat business writing as part of the industry’s responsibility as the world grapples with climate change. The company has invested heavily in recent years in data and the application of science to how global warming will affect risk. She sees an opportunity in the reinsurance of climate-related products and services under development.
“As primary insurers move into this space, it also means an opportunity for reinsurers,” she said.
“Our job is to bring consistent results to AXA that diversify the portfolio.” Nancy Bewlay, AXA XL Reinsurance
In addition to these potential growth areas, Bewlay sees opportunities in other areas where capacity is needed: artificial chat space and in lines impacted by the Ukraine-Russia war, including navy, energy and aviation.
Ultimately, across all industries, she argues, it’s all about knowing where you are in the cycle, which is sometimes only possible at an industry level with hindsight. But individual companies need to base their opinions on their own portfolios, she believes.
“Cycle management is about always knowing where you are in the cycle and defining it for yourself. My real estate team will tell you this is the best cat market they’ve seen since 2006. In American professional lines, it’s different.
“After two years of rising rates, we are now seeing a flattening. So it depends on where you stand in each industry based on your own benchmarks.
Bewlay has an extraordinary CV. Few other executives may have worked for a list of mentors/bosses that includes Warren Buffett, Hank Greenberg, Bill Berkley and Mike McGavick. During her 30-year career, she worked for General Re, which was acquired by Buffett’s Berkshire Hathaway, Greenberg’s CV Starr, WR Berkley E&S unit Admiral and XL Catlin. She served as Head of P&C Underwriting, North America at Swiss Re and also served at Marsh.
Despite this experience, this is Bewlay’s first Monte Carlo appointment. She says she is looking forward to rekindling relationships and meeting some clients in person for the first time. She notes that the face-to-face element will be unique and so important for some young participants accustomed to a virtual work environment. In a relational business and in a time of uncertainty on so many levels, that contact is vital, she believes.
“It’s a relationship-based industry and there’s a lot to discuss,” she said. “Our customers will want to talk a lot about cyber, climate change, and of course the need for additional chat capability.
“It will definitely be a priority. From our point of view, we know what capacity we want to bring to this market and who our best customers are. We are also always open to new customers. But it will be a big discussion in the context of the capacity constraints that we are seeing.
Such caution, she notes, is understandable, given the events of recent years. The industry has suffered not one but two Black Swan events in recent years: the COVID-19 pandemic and a frequency of catastrophic events that exceeded anything risk models predicted.
“We’ve had flooding in Australia, hailstorms in France, more wildfires – the uncertainty remains. People ask, “Is this the new normal?”. The industry stayed disciplined because we had those two black swans,” she said.
“If five years ago you were doing your scenario modeling, you would never have predicted this. So the industry was surprised.
Bewlay explains how she sees her job at the head of AXA XL Réassurance: bringing added value to the AXA Group by offering diversification and stability of results.
“Our job is to provide AXA with consistent results that diversify the portfolio. The question for me and the wider AXA XL Reinsurance management team is, which clients do we serve and how does this combination help us create the ideal global AXA XL reinsurance portfolio?
“This reflection will guide my conversations in Monte Carlo,” she said.
Its mission, argues Bewlay, is facilitated in some ways by the fact that AXA is a parent. She describes AXA XL Reinsurance as a strong Tier 2 reinsurer. Although it is overshadowed by Swiss Re and Munich Re, with the support of its parent company, it can match them in terms of overall balance sheet, financial strength, expertise and access to different markets around the world.
“My job is to translate that brand and that financial strength into opportunities in the reinsurance business,” she said. “We have expertise in real estate, cat real estate, all long tail lines and we also have a nice portfolio of credit and surety, maritime and aeronautical activities.
“We have expertise in all of these areas. Our customers matter: we invest in long-term relationships. We have been working with some clients for over 30 years. We are still paying claims 30 years later. Additionally, we are very committed to data and analytics, which are some of the best I have seen in my career.
“Finally, we are a completely global company. We combine local knowledge and global expertise when allocating our reinsurance capital.
“The world is different everywhere. There are problems in some parts of the world that don’t exist in others. Each market works differently. The protection gap is wider in some places than in others. This local knowledge gives us an edge,” she concluded.
Monte Carlo Rendez-Vous, AXA XL Reinsurance, Property Cat, Nat Cat, Cyber, Climate Change, Catastrophe, Insurance, Reinsurance, Nancy Bewlay, Monte Carlo