AXA reportedly looking to offload reinsurance arm

Reuters has reported that AXA is looking to sell its reinsurance arm under AXA XL, as it looks to reduce its exposure to natural disasters.

The company is said to be exploring the potential to sell the division, or to list it and take it public, according to unnamed sources.

Discussions are said to be preliminary in their nature, but AXA is said to be concerned over growing exposure to natural catastrophe events, and so keen to reduce its property reinsurance exposure.

AXA has been reducing catastrophe exposure in its AXA XL property and casualty (P&C) insurance and reinsurance division in recent years, downsizing its catastrophe book.

Seeking to smooth its earnings and remove the significant downside experienced after major global catastrophe events such as hurricanes, AXA has shrunk its reinsurance book already and slashed cat exposure in its commercial insurance book.

Now, reinsurance is priced much more highly and Reuters suggests this could make a sale more attractive.

The AXA XL reinsurance division has a significant base in Bermuda, where deals have recently been completed, such as RenaissanceRe’s acquisition of Validus from AIG.

The AXA XL Reinsurance business could prove an attractive addition to another Bermuda carrier looking to expand, or to an international player looking to add global P&C reinsurance to its business.

AXA XL also has an established insurance-linked securities (ILS) and third-party capital arm, with the AXA XL ILS Capital Management division having over $1 billion in third-party investor assets under management at the end of 2022.

In the current market environment, the AXA XL Reinsurance division could be an attractive bolt-on for many international players looking to broaden their reinsurance expertise at a time of attractive rates and pricing.

Recall that French insurance group Covéa was reportedly targeting an acquisition of AXA’s non-life reinsurance operation back in 2021.